In boosting businesses, we could spurt like Ferraris, but we’re moving at Turtle speed
The analysis of the use of funds and current tendencies in the country’s economy leads to the obvious conclusion that we use the available financial resources in Lithuania in a too conservative way, and, instead of the opportunity to exploit the situation and spurt at the capacity of Ferrari, we choose a safe but a very slow growth at the speed of a Turtle.
From a psychological point of view, the situation is understandable, since along with the usual risks – commercial, technological and many others, business today faces the biggest challenge of regulation.
Recalling the lessons of 2009-2011 crisis, both business companies and banks more often ground the management of their economic situation on risk minimization. In other words, for reasons of caution, they would rather not grant a loan than allot time for a more thorough analysis of the situation.
However, a qualified and comprehensive risk management provide opportunities for business development, especially now, when we have a sufficient number of automated management tools based on data.
Several weeks ago, a survey carried out by the Bank of Lithuania (LB) showed that at the present moment, a more careful consideration should be given to hotels, restaurants, and part of real estate companies. However, the significantly reduced or discontinued funding has had a negative effect on an absolute majority of business sectors whose situation during the pandemic has not gotten worse and has even improved.
Capital adequacy is good, but a reluctance to lend money remains
Responsible lending constitutes the backbone of any economy, and Lithuanian business has learned to take a responsible attitude to loan repayments. For example, Lithuania is marked out among other countries of the European Union (EU) by the smallest – only 3% of all loan portfolio – part of business enterprises which have made use of a moratorium on loans declared in the spring of 2020.
In addition, according to the Bank of Lithuania, part of non-performing loans has been regularly decreasing and now has reached the lowest historical level of 1.5%. In other words, in their concern about high credit ratings and a good financial reputation, the enterprises are doing their utmost to repay both loans and interest on time.
With full knowledge of the aforementioned facts, what surprises, is a particularly prudent financing of business or strict conditions of granting loans, especially taking into account the fact that the population’s and enterprises’ deposits have reached record heights on a global scale. In Lithuania, the capital adequacy ratio of the bank sector having reached the highest bar of 25% in 2015, has remained at the top and currently fluctuates at around 22%.
The situation is changing dynamically, but every company must be evaluated separately
On the other hand, the analysis of the financial situation of enterprises warns that the situation in the market is changing dynamically. For example, if in 2020, 11% of enterprises entered the highest and high classes of bankruptcy risk, this year there are 17% of such enterprises. There is a greater probability that part of enterprises may fall behind on their payments. For example, in 2020 a high and the highest risk of payment delays was attributed to 18% of companies, however, this year the number of such enterprises has increased by 31%.
And still, the analysis of separate sectors provides more clarity. For example, the number of construction companies of high and the highest classes of risk has risen over the year from 19 % in (2020) to 23% in (2021). And in the transport sector from 15% to 23% respectively. A greater emphasis should be laid on the situation of trading companies. The companies of this sector have split into two blocs – companies whose activity was restricted and the financial situation was getting worse, and the ones whose situation was changing for the better.
Unfortunately, in the catering sector the situation is still the worst. Last year 30% of these companies were classified as having high or the highest risk, and this year this figure reached 45%. However, it is believed that a gradual loosening of business restrictions would enable the recovering of this sector.
The services sector is now doing well, – part of its enterprises of high and highest risk remains moderate, although it has increased by 6% to 9%. Every enterprise must be evaluated individually, and if the financial position and discipline are strong, there are no reasons for the discontinuation of financing such businesses.
We are living in many-speed economic conditions. When some enterprises are made to stop their activity, others experience a boom and have successfully moved their business to digital space. The EU business support measures have deferred the declaration of bankruptcy for part of enterprises. However, the situation can change even more dynamically when the states‘ support is withdrawn. This aspect makes one carefully supervise one‘s business partners, require quarterly financial reports, a record of the quality of transparent property and its declaration.
What rules would I most recommend to comply with? The enterprises which have the experience of assessing their partners, know that information in credit bureau systems which is updated every day, includes tens of various indicators, and algorithms which calculate creditworthiness and risk, evaluate more than 100 different parameters. However, at present, in evaluating the new partners‘ financial statements, activities or shareholders‘ business relationships, I would suggest paying particular attention to negative information. Check if there are no court actions, if the number of employees has not drastically decreased, and if there are no recorded arrears. Under the conditions of big flow of information your business could be assisted by an early warning system which would allow to see the threatening changes and thus, react immediately.
We have a sufficient number of tools of risk management, it is time to make a more efficient use of capital
Current technological innovations make it possible to both disclose and find information about the buyer‘s or partner‘s debts during a few seconds. Normally, the essential information about overdue payments is freely available. Therefore, I would urge again that every granting of credit should be considered separately. Evaluating the aforementioned figures, it becomes obvious that we have not used great possibilities to help economy recover as soon as possible. Guarding ourselves against a very small part of unreliable debtors, we punish a far bigger part of disciplined businesses.
An operative exchange of information about debtors could assist us and others in making more precise and quicker decisions as well as preventing a domino effect, when the debt of one enterprise establishes the whole chain of overdue payments.
Let us go back to strategies of a Turtle or Ferrari. There are different tools of risk management. It is possible to insure oneself against taking on any risk. In this case the enterprise will grow slowly.
Or, on the contrary, one can use all the capacities and possibilities of Ferrari. This car has not only fast acceleration and high speed, but also a well-operating brake system which in business, is analogous to data-based risk management.
There is no doubt that crediting must be responsible and take into consideration all the risks. However, at present there are enough reliable tools which assist in making optimal decisions. Therefore we can better employ capital, promote the country‘s business and stimulate its economy.
Jekaterina Rojaka,
Chief Commercial Officer,
Creditinfo Lithuania
Creditinfo appoints Global Sales Leader
Creditinfo appoints former Experian consultant as global sales leader
Decision analytics leader welcomes Burak Kilicoglu to growth-focused senior role
LONDON, UK, 30th March 2021 – Creditinfo Group, the leading global credit information and decision analytics provider, today announces that it has appointed Burak Kilicoglu as its new Director of Global Markets to guide Creditinfo’s global sales teams strategically and operationally through the company’s next phase of growth.
Burak joins Creditinfo following 15 years at Experian where he provided strategic risk management consultancy on debt management, customer management and originations for retail banking as well as telecommunications sectors. In his new role he will be based out of the company’s Monaco office and set and execute a strategic vision and roadmap for sales in collaboration with other Creditinfo executives and key stakeholders.
With over 25 years of experience in the financial services industry, Burak will act as a key liaison between all business unit leaders to grow the global sales team’s capabilities, keeping pace with the ever-growing and changing needs of the business.
“Creditinfo continues to grow and develop as we realize our ambitions to enable corporates, SMEs and individuals be active players in the economy” commented Paul Randall, CEO at Creditinfo Group. “We’re delighted to bring Burak onboard to help us push forward as a business and further our ability to facilitate access to finance while also reducing risk for banks. Burak has a wealth of knowledge and experience that will make him a valuable asset to our business as we embark on our next phase of growth. His appointment, coupled with our new shareholder structure, brings fresh energy, thinking and impetus to our operations and will help us to capitalize on our unique position in the market.”
Burak Kilicoglu, Director of Global Markets at Creditinfo, commented, “I’m excited to be joining Creditinfo at such an important part of its growth journey. This is a company with significant growth potential and incredible products and technology to take to market. As the fintech industry continues to grow in global markets there is a huge opportunity to help organizations gauge their risk appetite and make informed and intelligent lending decisions based on a wide range of data source and market leading analytics technology. I’m very much looking forward to leading that charge and working with Creditinfo’s sales team and senior leaders to work towards expanding our market penetration and helping our clients make informed decisions with confidence.”
Prior to joining Experian, Burak was a VP in the European Card Services team at Bank of America, and before that held portfolio management roles at Discover Financial Services and Transamerica Retail Finance. He attended the University of Notre Dame – Mendoza College where he graduated with an MBA. He also has a MS in Industrial Engineering from the Istanbul Technical University.
This appointment follows the announcement of a new shareholder structure, with private equity firm Levine Leichtman Capital Partners as majority shareholders, and the appointment of Paul Randall as Group CEO to lead Creditinfo through a period of development and global expansion.
-ENDS-
About Creditinfo
Established in 1997 and headquartered in Reykjavík, Iceland, Creditinfo is a provider of credit information and risk management solutions worldwide. As one of the fastest-growing companies in its field, Creditinfo facilitates access to finance, through intelligent information, software and decision analytics solutions.
With more than 30 credit bureaus running today, Creditinfo has the most considerable global presence in this field of credit risk management, with a significantly greater footprint than competitors. For decades it has provided business information, risk management and credit bureau solutions to some of the largest, lenders, governments and central banks globally to increase financial inclusion and generate economic growth by allowing credit access for SMEs and individuals.
For more information, please visit www.creditinfo.com
Media Contacts:
Matt Silver
Babel Agency for Creditinfo Group
+44 (0)7769 266 452
Creditinfo IBCH (Ukraine) welcomes Kateryna Danylchenko as new GM
Kateryna has been appointed as GM of IBCH, a Credit Bureau and Analytics company in Ukraine in which Creditinfo has been a strategic investor since 2006.
Creditinfo Jamaica appoints John Matthew Sinclair as CEO
PRESS RELEASE
National Commercial Bank of Jamaica veteran joins Creditinfo team to help credit providers embrace digitalisation and boost financial inclusion.
Paul Randall at the Kafalah SME Financing Conference 2019
Kafalah SME Financing Conference was held in Riyadh, Saudi Arabia where they discussed current financing for SME’s in Saudi Arabia,how to build relationships between private and public FIs, government agencies and legislative bodies that support financing, current and future finance opportunities for specific business sectors and how to increase awareness of the most current international practices for financing SMEs.
Creditinfo Group awarded the Knowledge Prize 2019
The Association of Business and Economics has chosen Creditinfo as the Knowledge company of the year 2019. Creditinfo Group was chosen as the Knowledge Company of the Year by the Association of Business and Economics. During the selection process, companies that have excelled in their international markets in the recent years were considered. Other companies that also came at the top include CCP, Marel and Nox Medical.
Creditinfo’s Breakfast Seminar in Guyana
On Friday, April 27, 2018, Creditinfo Guyana hosted, current and potential subscribers from a broad range of utility, financial and other commercial entities, at a Breakfast Seminar in Georgetown to coincide with the visit of the Group CEO, Executive Director and Regional Manager for Latin America and the Caribbean. In attendance were representatives from 23 institutions.
Creditinfo’s Business Solutions Breakfast Seminar in Jamaica
Creditinfo Jamaica organised its first Business Solutions Breakfast Seminar, which was held in Kingston, Jamaica. The Seminar was held with a view of exposing subscribers and other critical industry officials to Creditinfo’s Value Added Products.
A challenger strengthens positions in Asia: Creditinfo opens a subsidiary in Singapore
After several years of actively listening to the market’s needs and expectations, the international innovator in credit risk management solutions’ – Creditinfo – opens a subsidiary in Asia. Counting the success of the full scope credit bureau solution implementation in Indonesia, launched back in 2017, as well as the positive results from various decision analytics and consultancy services in the region, Creditinfo opens its doors with a dedicated team of top-level professionals based in Singapore to meet the increasing demand for a fresh and innovative approach in credit risk management and fintech, as well to be closer to the company’s existing clients in order to serve them better.
THE CREDITINFO STORY – a real story about a really good company
Today is a special day as we have a movie premiere to announce: THE CREDITINFO STORY – a real short documentary about Creditinfo, or Creditinfo philosophy to be exact, and all of this through the eyes of the company’s founder and Chairman of the Board, Reynir Gretarsson.
The Creditinfo Story is a genuine documentary telling an authentic business story, that started back in 1997. It includes flashbacks on how the business was founded, reminds of what its roots were and displays the core if its DNA, which remains unchanged.
You are welcome to check it out right here.
