Dear investors,

The Covid-19 pandemic, in combination with social reactions, the measures taken by public authorities and the impact on the economy, is acquiring the characteristics of a force majeure. A force that is way larger than a single business, business sector, government or country can handle alone, and that will last way longer than a few weeks. I wanted to share with you, how we intend to cope with the stormy times ahead.

The ongoing turbulence in the markets is the reaction to a lack of information and extraordinary uncertainty as no one knows, how deep or how widespread or how long this crisis will be. What is positive is that at some point clarity will be restored and then every company will again be judged on its own performance.

Considering the speed at which the situation is changing, there is no way to give a particular promise to the future or provide a precise forecast. Having said that, there are few action guidelines that the IuteCredit Management will stick to and that will probably influence our decisions of the future, just like they have already influenced our decisions that we started to make already at the beginning of March 2020.

Keeping our people safe while business process continues

We are monitoring the situation very closely and have taken the necessary precautions to ensure the wellbeing of our employees and our customers. That means less physical contact and more interaction over the phone or computer.

Our business processes continue despite the restrictions of public life. IuteCredit’s workflow is flexibly scalable and runs on advanced software that enables seamless and synchronized collaboration between employees who work preferably either at home or in our branches.

We remain available for customers via call centers, emails and social media.

Whenever possible, we keep our branches open, but that depends on particular medical and safety situations, as the circumstances in the individual countries are different and very dynamic.

Operational focus on cash and existing customers

We concentrate on receiving repayments of loans and on the collection of debts.

At this point, we focus on the repayment dynamics of existing customers and on keeping repayments as stable as possible.

To put it plainly, cash is kind – to those who care about it before it’s too late.

Our focus is thus clearly on retaining our existing customers.

Of course, we continue to issue loans to those in need, albeit with a sense of proportion and to a limited extent. Thereby new customers have to meet increased requirements and accept smaller loan amounts.

Market environment and regulations

On a macro-economic level, we believe that the most likely scenario is that the economies of our countries will at least contract over the next nine months. For us, however, it means that the effects can be mitigated in advance by restructuring loan repayment schedules to levels that correspond with the prospective income structures. One should also bear in mind that unlike EU countries, most of the IuteCredit countries have low levels of public and private debt.

On the regulatory landscape, the authorities in Albania and Moldova have already encouraged the banking and microfinance sector to offer individual customers grace periods over the next three months. Such grace periods should be based on the merits of individual circumstances and if granted, should not give rise to change in provisioning. In addition, the central banks have adopted rules according to which customers may not be treated as defaulted during the emergency period. We expect a similar approach to be applied by authorities of all our operating countries and we deem that reasonable.

As a result of the general uncertainty and restrictions on public life, we also expect prudent consumers to limit their consumption.

Consequently, the demand for quality loans will probably also be lower.

Present situation and measures initiated

As of mid-March, our Customer Performance Index is still above expectations, which means that our customers’ payment behavior is admirable, in this difficult situation.

At the same time, we are in the process of reducing our operating costs by at least 20%. As a broad indication, we need less marketing and sales costs as well as labor force and technology. The effect of the cost reduction will become visible in the second quarter of 2020.

With regard to operating expenses and the sustainability of our interest payments, we have visibility of around 12 months, based on our current cash position.

In conclusion and to sum up, I would like to say that we are in good spirits and our processes are well-positioned for the current situation.

Stay healthy and confident! And if you have any questions or concerns, please contact us.

Tarmo Sild
Group CEO of IuteCredit