We feel grateful for our investors’ trust
Our investors are like our family and they have shown their trust in us. In April we suspended accepting new investments in order to monitor the effects of COVID19 and evaluate the risks to which our investors are exposed. Since then we were still receiving a lot of reinvestment of funds from finished investment programs. We noticed that even up to 30% of investment programs that ended during this period were reinvested. This shows a very strong trend of your trust in such an unclear period. We would like to mention that all reinvested investments in DoFinance starting from April 2020 were invested with an average rate of 10 % p.a. This trust gives us confidence to do our best to resume our operations. We will open the platform for new investments very soon with renewal of all of our services.
Alfa Finance has attracted Singaporean investor to further develop its business
For the past 3 months, Alfa Finance Group was engaged in negotiations about a potential investment in the company and has finalised negotiations with a Singaporean company engaged in agriculture to commit to invest up to 2m USD in the course of next 7 months.
The investment will be used to improve the financial stability of the company, make improvements in the IT system and finance development of new products that will even further diversify the risks and make the business even more stable.
Dofinance has received the first tranche of investment already and that has been invested initially in improving debt collection procedures in Indonesia. Further investments will speed up recovery from the COVID19 negative effects.
DoFinance has improved performance and internal processes:
Risk management throughout the company has been updated;
2020 was a year when most of the businesses learned very tough lessons. During this period Alfa Finance Group imposed several new risk management tools: loan underwriting systems of Loan Originators were reviewed, Investment strategies revised to restrict investments into high risk consumer loans; Due to requests from commercial banks, AML and KYC procedures have been improved and updated. All this was done with a single purpose – to ensure safe and sustainable continuation of the business and improving the returns of the investors. As one can see from the chart below, the improvements in quality after COVID19 kicked-in are impressive.
January – March, 2020 were affected by COVID19 pandemic and repayments were delayed, but immediate measures were put in place and issuing of new loans reduced substantially. Once data analysts approved that quality was getting back on track, loan issuing process was resumed. Right now the loan quality is very good, hence Loan Originator is planning on a more aggressive growth that will trigger by 0.3% slight increase of delayed loans (there will be no material effect on business results), but with other procedures in place it is still a reasonable decision to make.
Loan issuing strategy has been changed to mitigate default risks;
Loan Originators have completely restructured and improved scoring models, and underwriting principles of loans in order to avoid exposure to borrowers that underperformed during COVID19. For the past few months these new rules were in place and were monitored. The results are very good, and the quality achieved is even higher than per-COVID19. This requires much more effort from the client service centre, but given reduction in spending, the total cost of servicing the loans is still lower than previously. The current change in process has reduced delayed loan proportion by 75% (!). Hence since 1st of April, 2020 the Loan Originator is running a very safe portfolio.
New debt collection procedures in place;
In order to even more improve the recovery rates of defaulted loans, Loan Originator in Indonesia has imposed two more debt collection strategies on top of existing ones. Both have been tested and are now being scaled up and included in the debt collection process as a standard procedure. By imposing these new procedures, the immediate effect is that default rates are reduced by another 10%.
Available investments in Indonesian portfolio;
DoFinance is planning to offer investment in consumer loans from Indonesia. The loan term is 30 days. This period is short enough to recognize any changes in borrower behaviour and gives enough room to impose immediate corrective measures if needed. According to DoFinance, this is currently the safest available investment opportunity in DoFinance. Loan Originator in Indonesia is running a few more lending products in parallel, but these will be available for investment only once they prove to be safe. The other products are related to agriculture and healthcare.
Existing portfolio in Poland is in the collection process that is dependent on bailiffs and the court system of Poland. Nevertheless, from the communication the collection process goes really well, except that collection information will be updated once information about exact loans will be passed over from bailiffs and funds will be transferred from bailiff bank accounts.
Loans with that are late by 30 days will be passed for sale
Loan Originator in Indonesia is planning to impose a new strategy for delayed loans that are issued since 01.05.2020 – these loans will be passed over to an external collection company and will be sold not later than 90-100 days after their due date. Investors will be eligible for interest earnings for this period of time. In the event of the sale, the investor will recover all of the principal.
Such an approach will reduce uncertainty about the loan recovery time and recovery of the investment.
Over course of time, Indonesian Loan Originator is planning to submit even older portfolios for sale batch by batch.
COVID data in Indonesia
Although Europe is experiencing full scale second wave of the virus, Indonesia, after imposing “soft lockdown” is seeing an improvement in the number of incidences of COVID19. This is a positive sign as most of the businesses are back in operation with only few limitations. In the meanwhile, Indonesia is also experiencing a recovery from a short term economic downturn due to the pandemic.
Please stay tuned for even more positive news in the coming two weeks!
Should you have any questions, please feel free to contact our client support via email, whatsapp or webchat.