Lithuania

Lithuanian Neobank SME Finance Reported 57% Revenue Increase In 2020

by Fintechnews Baltic February 8, 2021

Lithuanian-based neobank SME Finance has reported that it chalked up fiscal revenues of EUR 7.7 million in 2020, which showed a 57% increase from the previous fiscal year.

The neobank said that its growth was driven primarily by a significant rise in the company’s financing portfolio, to a record EUR 55.1 million, up EUR 22.6 million from fiscal year 2019.

Continued successful cooperation with investors further strengthened SME Finance’s lending capacity to satisfy the growing demand for alternative lending.

A total of EUR 20 million in loans went to Lithuanian businesses through SME Finance under the economic measure Alternatyva administered by Lithuanian National Development Institution INVEGA, amounting to just under half of the total of EUR 50 million earmarked for this measure.

SME Finance also distributed a total of EUR 40 million of ultra-cheap stimulus financing to the market through the INVEGA measure “Loans to the businesses most affected by Covid-19”.

Additionally, SME Finance said that it had also “doubled down on launching a streamlined self-service platform” which allowed for customers to receive “financing approval almost twice as fast as before”.

Th eneobank added that it will continue to invest in automating its self-service system  in 2021.

Mindaugas Mikalajūnas

said CEO of SME Finance, Mindaugas Mikalajūnas said,

“As banks tightened lending conditions and demand for alternative financing increased, our decision to add long-term loans to our range of alternative financial instruments not only resulted in a significant growth of our overall financing portfolio from that of 2019, but also minimised the threat of financial exposure as insurance companies curtailed their risk appetite, which stalled the factoring sector.

 

In 2019, factoring services dominated the company’s financing portfolio. During 2020, the share of factoring decreased to 27.5% while business loans accounted for 71.3%. Our goal is to maintain a diversified portfolio composition in order to mitigate risk,”

The first wave of funding received from the European Investment Bank (EIB) is expected to reach businesses by the first half of 2021.

Of the EUR 80 million received, 70% (EUR 56 million) will be granted to factoring services for SMEs and 30% (EUR 24 million) to factoring services for midcaps.

Approximately 60% of the funds will be allocated to Lithuanian businesses, while the share awarded to Latvian and Estonian enterprises, in a common portfolio of factoring services, will amount to 20% each.

With the recent launch of a leasing service at the end of 2020, and with plans to further widen the range of financial instruments in 2021, SME Finance said that it anticipates continued customer growth.

As part of a 2021 localisation strategy, the company expects to strengthen its position within the Baltic alternative financing market through its investment in the positioning of teams in Latvia and Estonia.

Featured image: Mindaugas Mikalajūnas, CEO of SME Finance