Kellner’s Home Credit records losses as Russian economy tanks

12-03-2015

Home Credit BV, a consumer-loan and banking unit of Czech billionaire Petr Kellner’s PPF Group, last year saw a marked decline in its fortunes stemming from an economic downturn in its biggest market, Russia.

Photo: 2happy / freeimagesPhoto: 2happy / freeimages The firm posted a consolidated net loss of EUR 60 million (CZK 1.65 billion) in 2014, it said in a regulatory filing to the Czech National Bank on Thursday.

The previous year Home Credit – which provides loans in Central and Eastern European and Asian states – recorded a net income of EUR 324 million (CZK 8.8 billion).

Its consolidated assets fell year on year by 24 percent to EUR 7.04 billion (CZK 191.8 billion) on the back of reduced lending in Russia, whose economy has slowed due to a collapse in oil prices and sanctions imposed over the conflict in Ukraine.

Home Credit said in the central bank filing that it would continue a cautious policy in Russia – where the firm has already introduced more stringent lending standards – and focus on its business in Asia.

Last year the company provided some EUR 6.79 (CZK 185.1 billion) in consumer loans, roughly a third less than it did in 2013.

The share of problem loans (at least 90 days past due) had reached 15.3 percent by the end of last December. That compares to 12.2 percent 12 months previously. Home Credit attributed the growth to a decision to reduce its volume of freshly provided loans in Russia.

While the group – which was founded in the Czech Republic in 1997 – saw a general decline in lending and the deterioration of its portfolio in Russia last year, it remained on the up and up in Asia. In China, for instance, it provided 31.5 percent more in fresh loans than in 2013.

China’s share of all new loans Home Credit loans almost doubled to 17.2 percent. Meanwhile, Russia’s share continued a downward trend, falling to 62 percent.

Thanks to strong growth in Asia, Home Credit’s total number of clients grew by 15 percent in 2014 to reach almost 45 million.

CEO Jiří Šmejc said the results for last year were influenced by a macroeconomic downturn in Russia that was worse than most people had expected and the generally unstable economic environment.

Mr. Šmejc said expansion on the fast growing Asian market was one strategy being employed in what will be a difficult year for Home Credit; by the end of 2015 it will be present in 300 Chinese cities, while 40 new outlets are due to open in India.

12-03-2015