Not for release or distribution, directly or indirectly, within, into or in the United States or to or for the account or benefit of persons in the United States, Australia, Canada, Japan or any other jurisdiction where such offer or sale would violate the relevant securities laws of such jurisdiction

For Immediate Release

9 November 2020

Zaim Credit Systems Plc

("Zaim" or the "Group")

Third quarter 2020 trading update

Zaim Credit Systems plc (the 'Group' or 'Zaim'), the Russian focused fintech group providing financial inclusion for those consumers who are not well served by mainstream lenders, announces a post period end trading update from its wholly owned subsidiary, Zaim-Express LLC, ('Zaim-Express') in respect of the third quarter of the financial year ended 31 Dec 2020.

Highlights[1]:

·    Outstanding growth of amount funded online of 327% from £378k in Q2 2020 to £1,153k in Q3 2020

·    Strong recovery in amount funded to £2,307k in Q3 2020 representing increase of 42.3% vs. Q2 2020 (an increase of 4.3% on Q3 2019)

·    Covid-19 has resulted in a significant acceleration of the migration of the business model to online - positive for business growth and margins

·    Online now represents largest portion of the business accounting for 59% of the amounts funded in September 2020

·    During Q3 the Group traded profitably, was cash flow positive and is experiencing rapid growth

·    Continued enhancements to the credit scoring process has resulted in the weighted average default rate improving from 13.6% in Q1 to 12.1% in Q2

·    Generated positive operating cash flow of £149k in Q3 2020 vs. negative £178k in Q2 2020, which the Board believes demonstrates that the growth of amounts funded is healthy, solid and self-sustaining, which gives us good confidence in the long-term sustainability of our strategy

·    Zaim's cash position increased by £195k in September to £433k, despite the significant amounts reinvested into growing the loan book

·    Q4 is expected to see continued growth in the online segment combined with slight improvements in the default rates as a result of ongoing advancements to the credit scoring process

Siro Cicconi, Zaim's CEO commented:

"We are pleased to announce that Company has achieved its first relevant milestone: our online platform comprising the most significant part of the business for the first time in the Group's history. The business is currently trading profitably, cash-flow positive and its growth pace is solid and consistent driven by the online segment. This is the confirmation of positive trends we observed in the previous quarters and I am glad to note that these results go beyond our expectations.

All key performance indicators show positive trends: double digit monthly growth rates in amounts funded comes along with a decrease in the weighted average default rate, profit generation and positive cash-flow generation. All these achievements are made possible thanks to the highly professional work undertaken by our team on the evolution of our bespoke IT system and day-by-day operational management.

The figures don't show how quickly and professionally the team acted in managing unforeseen events as a direct result of the pandemic, but now we can see how much stronger the Group has become as a direct result of these actions.

I would like to thank the whole team for their dedication and look forward to this positive trend continuing over the coming months.

My outlook on the business is still prudent, because of the uncertainty caused by the second wave of Covid-19, but it is fundamentally positive in light of the above-mentioned achievements"

Third quarter 2020 trading update

The amount funded and the weighted average default rate are the key metrics for monitoring the performance of the business. The table below presents these two metrics for the last three quarters of 2019 and the first three quarters of 2020, except for the weighted average default rate that will become available after the end of Q4 2020:

Zaim saw a recovery in amounts funded back to almost pre-pandemic levels with a 42.3% increase in the amount funded in Q3 2020 compared to Q2 2020 mainly due to the expansion of its online business platform (a dip of 9.5% vs Q1 and an increase of 4.8% on Q3 2019).

The weighted average default rate decreased from 13.6% in Q1 2020 to 12.1% in Q2 2020 due to the improvement of the credit scoring system and, we hope, a trend towards normalization of customer behavior following the pandemic. This represents an encouraging performance given the unchartered territory as a result of the Covid-19 pandemic and the increases seen in default rates in Q4 2019 and Q1 for reasons outlined at the time.

Zaim has continued to improve its credit scoring system and expects to continue to see the benefits of this over the coming months.

Dynamics of the loan book

New loans volumes were positively affected by the rapid growth of online business and the market recovery after the lockdown measures were lifted in Russia in June 2020. Amounts funded demonstrated impressive month-on-month and quarter-on quarter growth with loans issued online increasing by 327% from £378k in Q2 2020 to £1,153k in Q3 2020. In September 2020, £526k was issued online which represents 59% of total amount issued that month, with the online division becoming the largest business segment for the first time in the Group's history.

Amounts funded in each of the months of the third quarter of 2020 are set out in the following table: 

Recent trading & Outlook

As can be expected, a significant driver of the overall growth of the business is the online segment which continues to exceed management's expectations.

In Q4 2020 we expect to a see a continuation of the business growth driven mainly by the online segment combined with slight improvements in the default rates as a result of continued advancements to the credit scoring process. At the same time, the business dynamics will depend on the pace of the resurgence of the Covid-19 pandemic and the overall economic environment over the course of the final part of 2020.  

Enquiries:

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").