APRIL REVIEW

Go back Tue, 2020-05-12

Dear Lenndy investors,

All around the world, COVID-19 pandemic is changing the dynamics of human lives. These changes are having an impact on the lives of individuals and the survival of businesses. The month of April 2020 was full of challenges and unexpected turns in all markets and the P2P market was no exception. The announced quarantine and other actions taken to reduce the negative effects of the global pandemic took a toll on all business sectors.  These transformations and changes are clearly reflected in untimely loan repayments at Lenndy.   

The most important mission for Lenndy is to ensure effective access for investors to the assignment of loans and to make sure the investors generate earnings. During quarantine time more than 90 percent of workload is dedicated to monitoring loan operators and BuyBack policy implementations. Lenndy team would like to share with you the main changes that have been taking place with loan operators during this period. 

 

FIRST FINANCE 

First Finance is operating solely in the territory of Lithuania. They are working with small and medium businesses where they are offering car hire purchase, car lease, technical equipment lease, working capital funds, mortgage loans.   

The biggest financial downturn after the announcement of the quarantine has been suffered by Taxi businesses, small enterprises, and car dealerships. This resulted in almost60 percent of delays in the loan portfolios and drastically reduced First Finance revenues. To make the matter even more complicated, the Lithuanian government issued a law amendment that entitled borrowers to moratorium upon which the borrowers are legally authorized to postpone their payments for 3 months.   

        First finance actions:  

  1. Cease issuance of new loans for 60 days or until the government revokes quarantine measures/restrictions. Only refinancing or small financing of existing clients that are still performing.   
  2. All returning capital is allocated to ensure the implementation of a BuyBack guarantee on Lenndy platform. The remaining capital is being accumulated for new future loans.   
  3. The debt collection team was increased to ensure a more effective debt collection process.   
  4. New loans will be oriented into broader diversification of loan portfolios (such as factoring).  
  5.    Liquidity ensuring by getting financial subsidies provided by the Lithuanian government.   

Currently, First Finance is undergoing a financial audit of the year 2019. Upon completion, Lenndy platform will share audit conclusions and remarks with its investors.  

  

DAILY CREDIT   

The future in Poland is also totally reshaped by COVID-19. Polish government developed new policies and adjusted the existing ones to guard borrowers’ social and economic positions which introduced some drastic changes to pricing policies of the newly issued loans.  Consequently, a large number of credit enterprises have ceased their activities, especially the issuance of long-term loans. While still in quarantine, courts and bailiffs perform their activities in low capacities, thus debt collection process is slow.  However, it is important to note that these are temporary difficulties negatively affecting the revenues of Loan operators in Poland.   

Daily Credit receivable portfolio for April 2020 amounted to 4.1 million euros, while liabilities to Lenndy is 1.34 million euros, other liabilities is 0.6 million euros.   

       Daily credit actions:  

  1. Cease issuance of new loans for 60 days or until the government revokes quarantine measures/restrictions. Only refinancing or small financing of existing clients is still performed.  Issuance of new loans will start after the quarantine restrictions are revoked or Loan originator finds ways to adjust its activities to the newly enforced legal framework.   
  2. All returning capital is allocated to ensure the implementation of a BuyBack guarantee on Lenndy platform. The remaining capital is being accumulated for new future loans.  
  3. Daily Credit is getting ready to launch in the market its new financing products for businesses i.e. factoring and leasing.   
  4. Due to new law amendments, Daily Credit will be issuing only short-term loans which must be paid off within 3 months.   

 

Financial audit of the year 2019 in Daily Credit will start in May. Unaudited financial reports will be uploaded to Lenndy platform in May 2020.   

  

SIMPLEFIN  

Offering only factoring (short term financing) SIMPLEFIN did not suffer a huge negative impact from COVID-19. Even they are a relatively small company we are happy to inform you that so far they have not been struggling with loan repayments. Moreover, they have not ceased or introduced any changes in their line of financing. SIMPLEFIN continues working without any changes.  

  

FINAL COMMENTS 

Currently, all Lenndy operators are keeping up with a BuyBack guarantee. It is of exceptional importance to note that so far we have not noticed any signs that would hinder either the issuance of new loans or implementation of the BuyBack guarantee. Most of Lenndy loans are way behind its scheduled payments, however, we all need to understand that in the light of current affairs we are in a shock of the changing market situation and new law amendments. We all need time to adjust and design new strategies and continue working. In the month of May, the tendencies of the past two months will change, the revenues of loan operators will increase and thus payments will no longer be so late. Please bear in mind that the government of both countries Lithuania and Poland opened the calls for financial measures aimed at easing consequences caused by COVID-19 (find more information here https://invega.lt/en/covid-2019/financial-measures-business-covid-19-crisis/).

These measures will help loan operators to deal with liquidity and insolvency.   

Please be assured that all loan operators go far and beyond adjusting to changes in the market and to amendments made in the legal acts so that they could fully renew their activities. Lenndy team is putting all its endeavors to ensure that loan operators observe their liabilities regime. Only working together we can achieve bigger goals, bigger dreams, and bigger earnings.

 

Lenndy team