Non-bank credit companies are licking their wounds after the pandemic. They let go and look for weaker numbers

The result was a slump in the business of non-bank lenders associated with the layoffs of employees across industry players, including big names. Another milestone in business development may come at the end of October this year, when people who have taken advantage of the installment moratorium should start repaying.

“In March, we suspended lending. We have resumed funding since May, with a greater degree of caution. In the first phase, only secured loans were provided, “says Zuzana Konečná from Acema Credit Czech.

According to the company, the company did not proceed with the dismissal of employees, but other companies in the field did not avoid the dismissal. “We are in an exceptional time and, as with many other companies, Provident’s business has been affected by a pandemic. At the moment, the size of our business has shrunk, so we have to adjust everything related to it, “says Viktor Boczán, head of Provident.

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Provident laid off almost fifty employees in the Czech Republic, which represents less than ten percent of the people working in his business. Fair Credit was also laid off at a similar percentage. “The whole situation did not allow us to keep all our jobs,” said Fair Credit CEO Tomáš Konvička.

This corresponds to the extent to which non-bank clients have taken the opportunity to stop repaying their loans. “On average, about ten percent of our company’s clients have applied for a moratorium,” says Aleš Janků, head of the Association of Consumer Credit Providers.

According to people operating in the non-bank loan market at the height of the pandemic, people from the most affected sectors, such as the hospitality industry and the car industry, practically stopped taking new loans overnight for fear of losing their jobs. At the same time, non-bank credit companies have significantly tightened the criteria for lending money to clients who became significantly riskier during the pandemic almost overnight.

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“According to us, the demand for our loans will increase after the end of the moratorium period, when we assume that the willingness of banks to provide funds to clients who have used this moratorium will decrease,” concludes Konečná from Acema Credit Czech. According to non-banknotes, their business has the worst behind them.

“We felt the effects of the pandemic and quarantine measures until about the end of May. Subsequently, the demand for products returned to the planned level and in recent months, on the contrary, it has exceeded it, which we attribute to the deferred financial needs of our clients, “emphasizes the head of EC Financial Services Miroslav Kučírek.

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However, the drop in profits will probably not be avoided this year by non-bank creditors. According to business people, the earnings of non-banking companies will fall by about a fifth this year. “It simply came to our notice then. It depends on what happens to the economy after the holidays. We have several models that we are constantly recalculating. Personally, I lean towards the border somewhere around 15 percent, “says Konvička from Fair Credit.

Specifically, companies are speculating on the share of clients they will not repay even after the end of the repayment moratorium at the end of October this year. The impact of state measures during a potential second wave of the pandemic will also be crucial. “If in the autumn there should be another freezing of the economy or restrictions with an impact on our business, such as another installment moratorium, then the fulfillment of current plans would of course be unrealistic,” adds Kučírek.

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According to the representatives of the association of non-banking companies, clients will be completely disoriented after the end of the deferral period. “Our clients often do not even know what and how much they owe. That is why we cooperate with non-profit organizations and the Ministry of Finance and we want to set up communication that reminds of the need to repay consumer loans, “says Janků, adding that the association will not be able to offer an assessment of the business situation until the end of this year.