ZAIM Credit Systems sees online business continue to drive growth
said accelerating online transition and related costs savings from store closures has helped offset the impact of the COVID-19 pandemic in its half-year results ended 30 June 2020.
Zaim said it had successfully implemented ‘decisive actions’ in order to mitigate the consequences of COVID-19 outbreak in 2020 including strict cost control measures and focusing on a new online business model.
The Russian-focused group said its online business has demonstrated ‘impressive growth’ to record-high levels by period end, with June demonstrating a 40% month-on-month growth.
The group noted that whilst business volumes had predictably been affected by several COVID-10 related restrictions, the business has demonstrated an impressive ‘resilience’.
Lending in the second quarter decreased by 36.4% compared to Q1 20, mainly due to "self-isolation" restrictions and economic uncertainty resulting in lower customer borrowing.
By the end of June 2020, Zaim said it had reduced the number of retail stores to 32 outlets compared to 92 outlets as at December 2019 while at the same time the group has accelerated its online business development and repurposed its resources from its stores.
The group held £0.81m cash as at 30 June 20, leaving it ‘well-funded’ to execute its strategy.
Shares in ZAIM Credit Systems have traded between 2.11p and 2.75p over the past month and were trading flat at 2.43p on Thursday morning.
In a post period end trading update from its subsidiary, Zaim-Express, Zaim confirmed continued record growth with volumes of total lending approaching pre lockdown levels.
COVID-19 related restrictions were lifted in Moscow at the beginning of June with subsequent further lifting of restrictions occurring later in July. As a result, the business has since seen positive momentum and observed ‘a continued increase in demand.’
“As expected, the business is seeing very strong growth in its online lending activity - an increase from £110k per month in January to £173k in June 20 representing growth of 57%.
At 30 June 20, online lending accounted for over 26% of loans issued and we expect this to increase further as the Online growth continues to accelerate", said CEO, Siro Ciccon.
Zaim said its online segment continues to be a significant driver of growth and is performing better than management's expectations, with July 2020 posting ‘another record month.’
The group expects to continue its recovery in its third quarter, driven mainly by its online segment alongside ‘slight improvements in the default rates’ as a result of continued advancements to the credit scoring process which it said should see improvements.
“We are confident that the group is going to benefit from this strategy regardless of the future development of the Covid-19 pandemic situation, as the online segment of the microfinance market is growing at an impressive rate and we have a competitive advantage via our online platform and bespoke IT system,” added Cicconi.
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