January – June 2019 / Management report

We are pleased to share the latest Alfa Finance Group management report with our investors and partners. On this report you will find the results and achievements of the first half of 2019 and plans for the next reporting period. In this blog article you can find the management report text version, or click here to see the full PDF version. If you have any additional questions – feel free to contact me, Ieva Kuka at ieva.kuka@alfafinance.lv.



Dear DoFinance investors,

This autumn Alfa Finance group will celebrate its 4th anniversary. These years are great proof of the proverb “Time flies”. During this time the company has started business in several countries, exited one, has grown from a small 5 person company into a holding with almost 200 employees. All this time we have been passionately engaged in new projects and the implementation of innovative ideas in real solutions. Since we have reached many important milestones, it is a very good time to share our roadmaps, ideas and vision with our esteemed DoFinance investors.


Alfa Finance Group. Type of activity

Alfa Finance LTD (henceforth – Alfa Finance) is a holding company, operating in the online short-term consumer lending and financial investment management (P2P) industry.

In 2015, Alfa Finance launched its operations, establishing a consumer lending company in Poland, in 2016 – in Georgia (due to the unpredictable regulatory environment, exited the market at the beginning of 2017), with the following expansion of the consumer lending business into Southeast Asia (Indonesia – the biggest country in the region) as well as the launch of the P2P investment platform in the European Economic Area.

Since 2015, Alfa Finance Group has invested 1.9 mil. euros into IT to develop a fully scalable IT system, which can process different types of products in different markets. The current portfolio of loans is worth more than 11 mil. euros. More than 125 000 clients have been serviced and 310 000 loans are issued in Poland and Indonesia. The total value of loans issued is 76 mil. euros.


Alfa Finance Group performance indicatorsValue
Registered customers1,350,000
Number of clients serviced125,000
Number of loans issued310,000
Current value of portfolio11,000,000 euros
Total value of loans issued76,000,000 euros
Total investments in IT1,900,000 euros



Performance and financial situation of the company

Alfa Finance is represented in the Polish market by the consumer lending companies Alfa Finance Sp. z.o.o. and AFK Sp. z.o.o. (henceforth – Alfa Poland) holding two brands – Tanikredyt and Opoqa Finance.

During the first half of 2019, due to the fact that the consumer lending market in Poland is saturated, the main focus of Alfa Poland  has been substantial improvements in efficiency, especially in internal process automation and client acquisition, as well as user experience.

Considering the portfolio’s volumes and quality, we see that during this period the number of  registered clients increased by 220,690; the number of loans issued grew by 18 300, while the non-performing loan ratio (henceforth – NPL rate) measured on 90 Days Past Due (DPD) continued its anticipated way downwards, showing an overall average of 5.95% for new loans issued. The NPL rate is in line with Alfa Poland’s expectations, and it is considered below average in the consumer lending market in Poland, hence Alfa Poland’s scoring tools and data assessment is working very well.

As the financial report shows, net turnover of Alfa Poland during the first six months of 2019 was EUR  1,946,816, net profit before CIT – EUR 194,465, EBITDA EUR 474,444.

Alfa Poland performance indicatorsValue
Registered clients220,690
Loans issued18,300
NPL ratio* (DPD90, new clients)5.95%
Net turnover1,946,816 euros
Operating profit194,465 euros
EBITDA474,444 euros
ROA (return on assets)4%


The first half of 2019 was considered demanding for all consumer lending industry companies in Poland, especially in the area of financing and portfolio management.

To properly address the potential cashflow risk, Alfa Poland re-modelled the bad debt portfolio management processes. As a result, most of the market dynamics are supported by proper initial and alternative scenarios. Such goal was achieved by fulfilling several complex activities like – extending the list of external debt collection partners and improving and implementing a few soft-collection processes in-house.

During the first six months of 2019, new sales channels for both Alfa Poland brands were added and additional tools acquired, in order to facilitate long-term marketing goals.


Future development plans

The second half of 2019 is all about making financial services even more available to our customers.

Redesigning of the customer journey for both Alfa Poland brands is in progress, so that the satisfaction  of customer needs and financing are brought much closer together. Financing should be easy, fast and tailored to the customer’s lifestyle.

To ensure a good fit between client needs and our services, the company is doing more thorough analysis of each client in terms of his/her financial standing. Hence scoring that is based on alternative data points such as bank account history, social network accounts and device activity are introduced. This gives more opportunities to make financing more effective, with almost no additional documents, and faster than ever before.


Risk management and factors influencing business performance

Today, the legislative path of the anti-usury bill proposed by the Polish Ministry of Justice intended to limit the potential revenue of the consumer lending industry, has not yet been enacted. Nevertheless, Alfa Poland has already taken the appropriate steps to prepare itself for changes in the market conditions, and with confidence we can say that we are ready for them.

If the changes in legislature are ratified, we will be introducing a new product that will be in line with the regulation.


Main events after the management report period / July – August

During the summer months we introduced a few service improvements in accordance with our vision – making financial services even more available to our customers:

  • Enhanced and more efficient loan issuance process – instant client verification through bank account data (within the scope of PSD2),
  • Continuing process automation – fully automatic loan disbursements and pay-by-link repayment functionality served to customers,
  • Continuous improvements in loan issuance / risk assessment algorithms – expanded external client data sources and risk measurement tools, based on alternative data points, allowing even more clients to be served without increasing the NPL ratio.



Financial situation and performance of the company

In the Indonesian market Alfa Finance is represented by the consumer lending company PT Alfa Fintech Indonesia (henceforth – Alfa Fintech) which operates a well-established and recognised brand – KreditCepat (English translation – fast loan).

The performance of Alfa Fintech during the first half of 2019 can be characterised by two main directions – improving the risk assessment process in order to lower the NPL ratio and finalising the licensing process (P2P Lending permanent licence for p2p and consumer lending operations. Henceforth – Lending licence) with Indonesia authorities.

During this period, the number of registered clients increased by 215,000; the number of loans issued grew by 38,600, but the NPL ratio dropped down and reached 19.24% (ratio for returning clients) that can be considered lower than average in the Indonesian consumer loan market. Alfa Fintech’s net turnover was 2,142,058 euros;


Alfa Fintech Performance indicatorsValue
Registered clients215,000
Loans issued38,600
NPL ratio* (DPD90, returning clients)19.24%
Net turnover2,142,058 euros

* Given the fact that the market is still rather underdeveloped, the NPL rates are decreasing on a monthly basis, hence the historic results are improving as well. The planned NPL rate by the end of 2019 is planned to be higher than in Poland, but much lower than the current rate. The decreasing trend suggests that this plan will be fulfilled.

During the first half of the year, Alfa Fintech strengthened the company’s positions in the industry by attaining achievements in the form of recognition, important development, and involvement in large projects together with the Financial Services Authority of Indonesia (henceforth – OJK) such as improving the regulatory framework. Significant improvements in client scoring and risk assessment process have been implemented. Main achievements in the first half of 2019 are:

  • Investments in technology and process improvement (e.g., implementation of facial recognition software, to compare a prospective borrower’s selfie with their ID and Alfa Fintech database) have reduced cases of fraud and this has led to significant improvements in issued loan quality and a decrease in the NPL ratio;
  • Submission of documents to obtain a Lending licence from OJK on 8 June 2019; exactly one year after the company received registration from the authority. Submission of documents fulfils the requirements imposed by the OJK, containing administrative evidence, business models, compliance with regulations and applicable policies;
  • On 8-11 July 2019, Alfa Fintech went through a final audit process to obtain ISO 270001, the application of international standards for the Information Security Management System, and the results were declared as passed. Alfa Fintech is now ISO 270001 certified.
  • Alfa Fintech maintains compliance with new regulations and policies implemented by the OJK, such as:
    • Transparency of products and services, by describing the fine detail of the loan products on the website. It is required to provide accurate information that is easily visible and transparent for the public.
    • Products are clearly defined without hidden costs or ambiguous
  • Alfa Fintech has moved to a new office in the main business area of Jakarta, as a result of the fast and steady growth of the company.


Future development plans

As a result of the “preparatory works” (licensing and improvements in issued loan quality) carried out within the last year, we see all preconditions for rapid growth during the next reporting period. In the upcoming months Alfa Fintech expects to triple the active portfolio and accordingly increase monthly sales of new loans by 40%.


Risk management and factors influencing business performance

The relatively new but fast-growing market environment highlights the main risks and opportunities Alfa Fintech may face at the end of 2019 and the beginning of 2020. These aspects are:

  • Properly regulated market improves customer awareness about Fintech products and their position in the market;
  • In a regulated and licensed environment there is greater potential to approach new investors in Southeast Asia;
  • Potential increase in new client acquisition costs;
  • More competition on the market and competitors improving their services;
  • Still rather underdeveloped reliable external debtor data bases for risk assessment when targeting new audiences.

Obtaining of a permanent Lending license, as well as constant improvements in risk assessment and client acquisition approaches, are preconditions for stable growth.


Main events after management report period / July – August

After submitting documentation for a permanent Lending license and finalising ISO270001, in June Alfa Fintech has continued the OJK required certification and in parallel has started to intensify sales activities:

  • Starting from July, a new client acquisition process has been intensified with the main goal to have growth in sales by 40% month-over-month while maintaining the client quality thresholds attained in the first half of 2019,
  • Number of Alfa Fintech directors who were certified by the Fintech Lending association of Indonesia (henceforth – AFPI) on 9 August 2019, were officially appointed by the OJK. The aim of this certification is to strengthen the Board of Directors as competent professionals in terms of knowledge of general regulations and business models of Fintech companies in Indonesia,
  • Specialised in-house financial staff was certified by the AFPI. A managerial team was established and passed Supervisor Collection Certification for lower to middle management.


P2P platform DoFinance

Financial situation and performance of the company

In P2P investments Alfa Finance Group is represented by DoFinance, which operates in Europe and the EEA. Loans originating in Alfa Poland and Alfa Fintech are exclusively available on the DoFinance platform.

P2P platform was launched in the beginning of 2017 with the main goals – making investing as easy as possible and with the promised return rates. This approach has been confirmed by the DoFinance auto-invest programmes.

Average investments in DoFinance in the first half of 2019 were 4080 euros with an average interest rate of 10.03%.

The number of registered investors has reached 4145. More than 34% of our clients are from Germany, 27% from Spain, followed by Latvia (4.5%), Italy, Portugal and Great Britain; however, Spain ranks 1st, being the most active investors in terms of “investment amount per investor by country”, followed by Germany and Italy.

In June, the DoFinance team met investors, bloggers and P2P industry professionals at “P2P conference 2019” held in Riga.


Future development plans

Regulated and transparent performance of P2P platforms in combination with the fin-tech approach in business and operations management will allow one to gradually increase the P2P investment platform market-share as such (currently, around 10% of investments are invested into P2P platforms from total funds operated by investors who consider investing into P2P).

Providing the stability of client`s investments and keeping interest rates at a proper level is what DoFinance and Alfa Finance group see as their strong and healthy competitive advantage. In order to follow this path DoFinance has started the licensing process to become a regulated player in the investment industry.

Easy-to-use and stable-in-profits is an approach that is very much appreciated by DoFinance investors. We will focus on platform development and client service, and we are about to introduce more investment-friendly and convenient features, such as Auto-reinvest.


Risk management and factors influencing business performance

Transparency of the loan origination process behind P2P investment platforms and keeping platform KYC (“know your client”) / AML (anti-money laundering) processes updated according to international and country authority regulations, are currently hot topics for all platforms.

Transparency of the loan origination process is an especially challenging issue for P2P marketplaces where investors can invest in loans originated by 3rd parties. Marketplaces have different business models, as loan origination companies and such P2P platforms operate with a limited amount of information about the safety of loans on their platform. Due to these circumstances, at DoFinance it is only possible to invest in Alfa Finance originating loans. Understanding and controlling all processes (from granting funds to the end-customer in Poland / Indonesia to timely paying interest to investors) are the main cornerstones of Alfa Finance’s operations.

Knowing customers (investors) has become one of the key issues on the daily agendas of P2P investment platforms. Banks and finance industry authorities are monitoring the platforms’ daily operations. DoFinance has established constructive and close partnership with our corresponding bank platform (largest in the Baltics and Scandinavia – Swedbank) and an autonomous public institution, which carries out the supervision of Latvian banks, credit unions, participants of the financial instruments market, the Financial and Capital Market Commission (henceforth – FKTK), in order to meet proper platform governance requirements. A corresponding bank performs audits of DoFinance AML/KYC operations on an annual basis.



The summer holiday season is over, which means that the active investment period has started. Looking forward, we acknowledge an everchanging complex world and environment in which we live, but we know for sure – being hands-on in all parts of our business gives great opportunities to predict market trends and be ready for tomorrow. We want to say thank you to all investors who appreciate easy and safe investing with DoFinance, and look forward to a fruitful autumn season.

If you have any questions, don’t hesitate to contact our DoFinance project coordinator, Ieva Kuka, at ieva.kuka@alfafinance.lv