Short term consumer lending fintech hits €5bn mark

By Ryan Weeks on Friday 6 October 2017

Alternative LendingDigital Banking

4finance gets upgraded by Moody’s while notching a major milestone.

4finance gets upgraded by Moody’s while notching a major milestone.

Europe’s biggest fintech lender by total loan issuance is a company that many will not be familiar with: 4finance. The short-term consumer lender has lent a grand total of €5bn since launching in 2008, spread across various markets in Europe and the Americas.

Funding Circle, in all likelihood the second biggest platform by cumulative lending, has lent £2.77bn in the UK. Of course, the likes of Funding Circle and Zopa will have far larger outstanding loanbooks at any given time, due to the longer average terms of their loans. But no other European fintech has disbursed more than 4finance.

4finance funds its loans through a mixture of sources, including bank deposits (it acquired TBI Bank in August 2016 for €69m) and bond listings. Coinciding with the €5bn milestone, Moody’s Investor Service has upgraded the company’s long-term corporate family and issuer ratings to B2 from B3.

Moody’s wrote in a statement that key drivers behind the decision were “the moderating risk appetite and growth strategy relative to the aggressive growth strategy it [4finance] pursued in its first years of existence, the predictive track record of its scoring and pricing models, and the benefits derived from 4finance's acquisition of TBI Bank in 2016”.

Mark Ruddock (pictured), who took over from George Georgakopolous as CEO of 4finance earlier this year, said that the company’s credit scoring, transparency, flexibility, multi-country focus and scale are why it is “uniquely positioned” to empower the financially underserved.

4finance unveiled its financial results for 2016 in August. These were highlighted by significant growth in revenues and originations. However, its profits fell by 9 per cent, which the company attributed to increased interest expense on its bonds, as well as to increased administrative costs (in part due to acquisitions, but also due to investment in the growth of the company). 

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