On the 18th of November, Creditstar held an Investor Webinar to give updates on the Company’s latest developments, introduce the 1st of December bond issuance terms, and answer investors’ questions. In this article, we will give an overview of the topics that were covered in the webinar.
Overview of Creditstar
Creditstar’s CEO, Aaro Sosaar, started the webinar with a brief presentation about Creditstar Group. Here are the key points from the presentation:
- Creditstar Group, established in 2006, is a provider of consumer financial services in Europe.
- The Company has more than one million user accounts across eight countries in Europe: Estonia, Finland, Sweden, Poland, the UK, the Czech Republic, Spain and Denmark. Creditstar is currently evaluating several potential countries to expand to in the future.
- The Company is run by an entrepreneurial team of more than 140 people from 30+ nationalities of different ages and backgrounds.
- The Group has a flawless credit history and no defaults on its debt.
- Creditstar has been profitable since its establishment. The Group has had a successful year and generated a net profit of 6.4 million euros in the first three quarters of 2021.
- Creditstar has been technology-oriented from the start: running on efficient automated processes and conducting operations online from the first step.
Creditstar Group’s Highlights in Q3
Creditstar’s highlights in Q3 of 2021 include receiving a Consumer Credit Provider licence from the Danish Financial Supervisory Authority, launching Monefit in the Czech Republic, and being chosen as a finalist in the 2021 Banking Tech Awards.
Due to the online nature of the business, Creditstar has been running as normal throughout the year despite COVID-19. Client repayments and non-performing loans have remained above expected levels throughout the period and the Company is seeing strong demand for its products. Creditstar expects to continue growing credit volumes in the coming quarters.
Business Operations Highlights
Creditstar’s Group Head of Operations, Aleksei Kurov, continued the webinar by giving an overview of the Company’s current operations and product organisational structure.
Current Operations
- Creditstar’s portfolios, revenues and profitability have been growing continuously in all quarters of 2021. The Group has had a successful year and generated a net profit of 6.4 million euros in the first three quarters of 2021.
- The Company is moving forward with ongoing upgrades and refreshing scoring and underwriting models that proved to be successful in 2020 and 2021. The current focus is on the optimisation of processes in collections and tools.
- In August 2021, the Danish FSA issued a license to Creditstar Denmark to undertake financial activities in Denmark and operate as a Consumer Credit Provider.
- As a result of pension payouts in Estonia in September 2021, many customers have repaid their old debts.
- Creditstar Group is currently focusing on growing the existing portfolios and launching Monefit in all countries of operation.
Product Organisation
At the beginning of 2021, Creditstar transformed from a functional to a product organisation. This means that the business is organised in separate divisions, each focusing on a different product and functioning as an individual unit within the Company.
Creditstar’s three product categories are Revolving Credit, Instalment Loan and Debt Management. The Company’s product strategy is to focus on portfolio growth via delivering value to customers.
The main reasons for transforming into a product organisation were to get better engagement, improve the sense of ownership and transparency, as well as increase the speed of decision-making.
Monefit Credit Line
Creditstar’s Chief Business Development Officer, Valter Kaleta, gave an overview of Creditstar’s newest business – Monefit credit line. One of the core ideas of Monefit credit line is to help customers finance their purchases when point-of-sale financing or hire purchase financing is not available.
The product works on the principle of Revolving Credit. Each customer is assigned a personal credit limit that they can use at any time in the exact amount they need. Once they pay back the funds they have borrowed, that amount becomes again available to use.
Monefit also has a sub-product called Monefit Split. Split allows customers to apply for up to 1000 euros for 3 months without any interest.
Monefit can be considered a successful product for several reasons: well-considered positioning (for pre- and post-purchase financing), efficient customer acquisition (0% interest for the first month), continuous customer relationships (revolving usage of credit) and healthy portfolio quality (good repayment behaviour).
Specialised bank licence
Creditstar has officially submitted a Specialised (Fintech) Bank Licence application. With the bank licence, Creditstar will be allowed to provide almost all traditional banking services within the EU/EEA area. The bank licence is issued by the European Central Bank through the Bank of Lithuania.
The main advantages of obtaining a specialised bank licence include the opportunity to lower the cost of funding and offer products with a lower financial cost to the customers. In addition, it makes it easier to introduce new products (bank accounts, cards, payments) and enter new markets where a bank licence is required.
Creditstar expects to receive a specialised bank licence in 2022.
Q&A Section
At the end of the webinar, Creditstar’s management team answered questions received from the investors. Here is an overview of the questions and answers.
When will Creditstar’s annual audited report be published?
Creditstar expects to publish the report during this month (November).
Raising equity capital is something that Creditstar is currently looking into, especially after receiving the annual report.
IPO might be considered in the future (in 3–5 years time). Before that, the Company wants to ensure that they have all the necessary processes ready to go public.
Creditstar is continuously researching new markets, as well as reviewing the markets that have already been shortlisted. One of the potential markets is Romania.
However, the Company’s main focus is on strengthening its position in the markets they are already operating in. For instance, expand with their credit line product to the countries that currently have only the instalment loan product.
Creditstar is issuing loans in different markets all the time. The decisions about where to list the loan are mainly based on investor demand and the prices on Mintos and Lendermarket.
Hybrid working has proved to be an optimal solution for Creditstar and its employees. After the Company gave its employees the opportunity to choose whether they want to be at home or in the office, they realised that it doesn’t really matter where and how people work. Allowing more flexibility has actually increased the engagement among the employees.
What is the source of revenue for P2P platforms?
P2P platforms are usually free of charge for investors. The platforms earn profit via fees charged from the loan originators.