NEO Finance Update, AB Interim Report and unaudited Financial Statements for twelve-month period ended 31 December 2020

NEO Finance, AB Interim Report and unaudited Financial Statements for twelve-month period ended 31 December 2020

In 2020 H2 NEO Finance, AB achieved strong financial results in terms of EBITDA and pre-tax profit. 2020 H2 was the first financial period when company reached not only positive EBITDA but pre-tax profit as well. In 2020 H2 pre-tax profit was EUR 141 K while in 2019 H2 it was negative EUR -506 K. 2020 H2 compared to 2019 H2 showed EBITDA increase of EUR 570 K (from EUR -352 K to EUR 218 K). Revenue increase of 42% was witnessed in 2020 H2 compared to 2019 H2. More detailed information below in table.

 2020 H22019 H2∆, %
Granted loans, EUR10 139 2999 583 3546%
Sales revenue, EUR1 319 839927 79742%
Cost of Sales, EUR(820 436)(913 804)10%
Gross profit (loss) EUR499 40313 9933469%
Operating costs, EUR(281 144)(365 850)23%
EBITDA, EUR218 259(351 857) 
Pre-tax profit, EUR141 322(505 571) 
EBITDA Margin, %11%-54% 
Return on Equity (ROE), %4%-31% 

In 2020, despite of COVID-19 pandemic situation, which negatively affected Lithuanian consumer credit market, NEO Finance, AB, continued to increase the volume of loans issued, reaching EUR 19.09 M and, compared to 2019 grew by 2%. Likewise, the income grew to EUR 2.48 M versus EUR 1.72 M in 2019 (44% growth). In 2020 Company’s EBITDA was EUR 158K, whereas in 2019 it was EUR -647 K. Positive change was affected by active loan portfolio growth, purposefully managed costs and a considerable attention dedicated towards software development, targeted at process automatization. Accordingly, the net profit/loss in 2020 was EUR -4 K, compared to EUR -881 K in 2019.

 20202019∆, %
Granted loans, EUR19 084 97018 624 1662%
Income, EUR2 483 2451 723 50644%
Cost of sales, EUR(1 561 098)(1 531 910)2%
Gross profit, EUR922 147191 596381%
Operating costs, EUR(764 077)(839 033)9%
EBITDA, EUR158 070(647 437) 
Pre-tax profit, EUR(4 366)(880 946)100%

Payment initiation service (PIS) was growing rapidly, almost doubled transactions number because of growth of clients from Lithuania and Latvia, as well as rapid service expansion in Estonia and The Netherlands. In 2020, the company performed over 6.94 M transactions, compared to 3.75 M transactions in 2019. Accordingly, primarily due to the increase in PIS volumes, payment-activity-related revenue increased more than 2 times, from EUR 178 K in 2019, to EUR 477 K in 2020.

Interim financial statements and interim report of NEO Finance, AB (legal entity code 303225546, address: Vivulskio st. 7, Vilnius, Lithuania) for twelve months period, as well as Confirmation of responsible persons, are ready for acquaintance in the attachment.


Neo Finance, a leading P2P lending platform from Lithuania

Neo Finance is a leading P2P lending platform from Lithuania, that already granted more than 63M eur in consumer loans.

Introducing Neo Finance

Main advantages of Neo Finance

Unlimited e-money institution licence (EMI)

The first and, so far, the only Lithuanian P2P platform operator to hold the unlimited EMI licence which allows operations in entire European Union. This ensures safety of clients’ money, as it is kept in an account separate from that of the company. In addition, the company is constantly supervised by the Bank of Lithuania.

Buyback and Provision fund services

When agreements with borrowers are terminated, investors can sell their investments for 50-80% of their face value to NEO Finance. Also, a unique service of Provision Fund allows investors to reduce their investment risk: if a loan defaults, NEO Finance guarantees to repay investors with all the company assets as collateral.

Average return rate of 12 percent

Historically, Lithuanian consumer loans had high interest rates, as the market was not regulated until 2016. However, even after the regulation was implemented, the interest rates remained high (16.8% for banking consumer loans, and 78.9% for other financial institutions’ loans in 2016). Therefore, risk / reward ratio is one of the highest in Europe

Personal IBAN accounts free of charge

Every user account is linked to a personal IBAN account, which is free of charge. Payments sent to other financial institutions are also free of charge for VIP investors. In addition, one can have multiple IBAN accounts under their name at NEO Finance, which enables them to test and employ different investment strategies.

Built inhouse IT system

The Lending Platform is very similar in its functionality to a banking system with IBAN accounts, support of payment transactions, and similar functions. It was built and is being constantly developed in-house by highly experienced IT and banking professionals.

Close long-term partnership with debt collection and recovery company

All debts are handled by a single firm, which has been a long-term partner of NEO Finance. The company has 8+ years of experience in delinquent loans recovery, which ensures speed and quality of the service: 65% of debts have been collected within two years.