Experian MicroAnalytics and Creditinfo unite to launch groundbreaking new fintech solutions

NAIROBI, Kenya, Aug 12, 2024 – Experian MicroAnalytics, a global leader in mobile financial services, and Creditinfo Group, a leading global service provider for credit information and risk management solutions, have partnered to combine Experian MicroAnalytics’ mobile financial services platform with Creditinfo’s scoring models and local market expertise, providing innovative new solutions that facilitate access to finance for individuals and businesses across Africa.

Experian MicroAnalytics, renowned for its risk management solutions utilized by major telcos worldwide, brings its expertise in mobile financial services to the partnership. Their solutions, such as mobile money loans, advanced analytics and machine learning, help to support underserved populations who don’t have access to traditional banking services. Experian’s technology not only facilitates seamless financial transactions but also generates additional revenue streams for telecommunications operators and banks, if present as fund providers.

“Experian is dedicated to driving financial inclusion globally, and our partnership with Creditinfo strengthens our ability to deliver impactful solutions,” said Sammy Hamoudi, General Manager of Experian MicroAnalytics. “Together, we aim to empower telecommunications operators and fintechs to extend their services to previously underserved populations.”

Creditinfo provides comprehensive credit bureau solutions to enable informed decision-making in the financial sector. With this partnership, Creditinfo will further establish itself as the leading credit bureau provider in Africa, enhancing its business risk assessment capabilities and customer insights.

“At Creditinfo, we recognize the transformative power of data-driven solutions in fostering financial inclusion,” stated Kamau Kunyiha, Regional Manager, East and Southern Africa at Creditinfo. “Our collaboration with Experian will help individuals and businesses across Africa gain access to finance, underscoring our shared vision to drive positive change and improve the standards of credit assessment.”

As joint Gold Sponsors of Africa Fintech Festival 2024, Experian MicroAnalytics and Creditinfo showcased their partnership at the event held in Kenya in early June. The festival provided an ideal platform for them to demonstrate their collaborative efforts. Through fireside chats and conference discussions, participants were able to explore opportunities to enhance financial inclusion in Africa through future collaboration.

About Experian MicroAnalytics

Experian MicroAnalytics is a global leader in mobile financial services, providing risk management and marketing solutions to telecom operators and fintechs around the world.  Our AI cloud platform increases consumer engagement, reduces churn, manages lending exposure and optimises conversion rates.

With over $4.5 billion in loans already provided by Experian MicroAnalytics, we deliver personalized financial experiences to consumers, empowering financial inclusion while minimizing bad debt.

For more information, please visit www.e-microanalytics.com

About Creditinfo

Established in 1997 and headquartered in London, UK, 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 the field of credit risk management. 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

Creditinfo, FSD Kenya, and CIS Kenya Launch the Findings of a Study on Kenya’s Credit Market Landscape

Press release

 Nairobi, Kenya – Monday, 5th August, 2024 – A new study has revealed a complex picture of Kenya’s credit market, with digital loans dominating the landscape while the overall value of loans disbursed is on the decline. The study conducted by Financial Sector Deepening (FSD) Kenya, Credit Information Sharing Association of Kenya (CIS Kenya), and Creditinfo Credit Reference Bureau Kenya Limited (Creditinfo CRB), provides a comprehensive analysis of credit data spanning five years.

The study is titled Kenya’s credit market landscape – Demand side analysis of credit records held by Creditinfo CRB, is based on an analysis of credit records held by Creditinfo CRB.

The use of Credit Reference Bureau data in this study provides an opportunity to analyse credit data that is aggregated from various sources and segmented according to borrower’s sex, type of loan (digital and non-digital), type of borrower (company and individual), and provider type (bank, MFB, and MFI). The data covers the 5-year period from January 2019 to December 2023.

Summary findings

1. Kenya’s credit market is dominated by digital loans (in volume terms) provided by banks mostly to male Banks continue to dominate the retail lending market, accounting for over 90% of the volume and value of digital and non-digital loans.
2. The number of unique borrowers has been on a steady increase on an annual basis, with

7.5 million unique borrowers in 2019 compared to 11.4 million unique borrowers in 2023. This constitutes both individual and non-individual borrowers (companies). On average, there are 6m unique male borrowers and 4.3m female borrowers each year.

6. In contrast to the increase of unique borrowers, the aggregate value of loans disbursed annually has been on a decline, with KShs 2,067bn issued in 2019 compared to KShs 1,937bn in Male borrowers accounted for 61.4% of the total number of loans and 71.1% of the total value of loans issued between 2019 to 2023.
7. On average, there are 10 million unique borrowers who have at least one digital loan annually compared to 1 million for non-digital loans. Approximately 270 million new digital loans valued at KShs 1,512 billion were issued over the five-year period compared to 8 million non-digital loans valued at KShs 8,282 billion over the same period. There is, however, an observed decline in the average value of nondigital loans, from an average of KShs 8,353 in 2019 to an average of KShs 4,555 in 2023, a 45% decline.
8. The number of new negative listings declined by more than half between 2019 and 2023. Whilst this can be attributed to changes in the regulatory framework on the treatment of negative listings, there is a marked decline between 2019 and 2020 which was beforethe regulatory changes. In 2023, 933,551 individual borrowers were negatively listed with Creditinfo CRB compared to 2,204,591 individuals in 2019.
9. Female borrowers have better repayment histories compared to men, accounting for an approximately of 36% of the new negative listings over five-year period, compared to 64% for
10. Most borrowers who have a negative record have an outstanding loan balance of between KShs 1,001 to KShs 5,000. The data further indicates that a higher proportion of borrowers initially listed as having repayment difficulties with their loans (negative record) managed to fully repay them off after seven months and within one
11. 69% of borrowers that previously had a negative record were subsequently issued with a new This is contrary to the public’s perception that the CIS mechanism is a blacklisting tool and that a negative listing automatically precludes a borrower from accessing future loans.

“The development of Kenya’s credit market is at the core of FSD Kenya’s work and strategy. While many of the building blocks that underpin an efficient and effective retail market are in place, available evidence points that the provision of appropriate and affordable credit remains a challenge. MSMEs and women continue to be underserved. FSD Kenya’s work in credit market is aimed at working with various partners to address the factors that constrain the flow of productive credit to where it is needed the most. Part of this includes creating the knowledge and evidence base through research and analysis to inform the direction of market development and policy interventions. This study is part of those efforts. The expectation is that the study will provide the basis for engagement with various stakeholders on the development of Kenya’s credit market, long-term policy implications, and the functioning of Kenya’s Credit Information Sharing mechanism.”, said Francis Gwer, FSD Kenya’s Senior policy specialist.

“The Credit Information Sharing (CIS) mechanism has significantly advanced since its inception in Kenya. The transition from negative-only reporting to the bureau to comprehensive full-file reporting to the bureau marked a pivotal moment, fostering innovation and financial inclusion. Data gathered throughout this evolution has proven invaluable for market growth and innovation. Further advancements, such as incorporating all credit sectors and enabling real- time reporting, have the potential to elevate the CIS mechanism to new heights.”, said Kamau Kunyiha, Regional Manager, Creditinfo CRB

About FSD Kenya

Financial Sector Deepening Kenya (FSD Kenya) is an independent trust dedicated to the achievement of a financial system that delivers value for a green and inclusive digital economy while improving financial health and capability for women and micro and small enterprises (MSEs). We work closely with the public sector, the financial services industry, and other partners to develop financial solutions that better address the real-world challenges that low-income households, micro and small enterprises, and underserved groups such as women and youth face. More details about FSD Kenya.

About CIS Kenya

The Credit Information Sharing Association of Kenya (CIS Kenya) was set up to institutionalize the National Credit Information Sharing (CIS) Forum. The Forum was created in early 2012 in order to bring together both bank and non-bank credit providers to map the way forward towards implementing full file comprehensive CIS in Kenya. Prior to the formation of CIS Kenya, the implementation of CIS in Kenya was spearheaded by the Kenya Credit Information Sharing Initiative (KCISI), a partnership between Central Bank of Kenya (CBK) and Kenya Bankers Association (KBA). More details about CIS Kenya.

About Creditinfo

Established in 1997 and headquartered in London, UK, 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. More details about Creditinfo CRB.

Open Banking Solutions at Creditinfo

In 2020 Creditinfo Group decided to be part of the Open Banking initiative by starting to investigate the options of using customers’ bank account statements in their offering. The account information service is based on the PSD2 directive. For known reasons, it is not possible and acceptable to have access to customer bank account data without consent.

Creditinfo have tackled the opportunity in two different ways. In the Baltics and Iceland, the chosen route was to apply for an FSA licence to offer end-to-end customer account statements transfer from their home bank to a third party, from whom the customer applies for credit , e.g. car loan. In the Czech Republic and Slovakia namely due to the long and cost-intensive process of “passporting” CI’s Estonian license, the chosen route was collaboration with a local technical partner called Sokordia Tech.

A little bit more about above-mentioned two ways to offer Open Banking solutions in Creditinfo Group.

In 2021 Spring, Creditinfo Estonia received permission from the Financial Supervision Authority to start offering account information services in Estonia, which later in Autumn expanded to the markets of Latvia and Lithuania. Today, Creditinfo has been offering the account information service in the Baltic market for almost three years. Creditinfo have real-time access to the transaction data of customers of banks and financial institutions using a secure data transmission channel and customer consent.

In Spring 2024, Creditinfo Estonia finalised the Iceland licence application process from Estonian FSA and can officially offer account information service in Iceland.

Beside regulative and compliance part, Creditinfo also has full technical integration and capability in developing categorization when offering account informatoin service. With opportunity to access customers bank account data, the aim is to offer more transparent credit risk evaluation to customers and third parties, who find high value from the knowledge of their customers account information to make data-driven, intelligent credit and business decisions.

As mentioned above, Creditinfo also have Open Banking cooperation and partnership in the Czech Republic and Slovakia with fintech company Sokordia Tech, teaming up to capitalize on Creditinfo’s market position  whilst leveraging Sokordia Tech’s AISP and PISP licenses and Open Banking services platform to provide PSD2/Open Banking services to several financial services clients in the market.

In the Czech Republic and Slovakia market, Creditinfo currently has 5 customers utilizing the Open Banking platform, processing more than 1.2 million open banking transactions per month. Depending on the specific requirements, pain points, and use case of the Client, Creditinfo  has developed a “Categorization In-a-Box” , Multi-Service platform called Transaction Analysis Service replete with 40,000 pre-installed business rules that can sit atop and work with any Open Banking Open APIs in any country. The service is comprised of 6 unique methods/services (AIS+CIS+PIS) & PDF tools via one API as detailed below:

1. PSD2parser: extracting raw data from PSD2 bank statements
2. PSD2tags: tag each bank transaction with one to N identifying tags
3. PDFparser: Extracting raw data from PDF bank statements
4. PDFtags: Tag each bank transaction with one to N identification tags
5. 1UnitPay: Verification PSD2 payment (the advantage is that the payment is made in one step with statement extraction)
6. Bank Account Views: Repeated viewing of bank accounts without the need for customer re-authentication

Together with our partner Sokordia Tech, we currently have Open Banking APIs and are able to provide all these services under one single API for the following countries: Czech Republic, Slovakia, Hungary, Romania, and Poland.

Development work on the 3rd generation of the Transaction Analysis Service is currently in development, highlighted by:

• Deeper AI involvement in processes & rules & analysis
• Expansion of new online data inputs into transactional analytics
• Multi-language analytical tools
• GUI for clients to manage and report transactional analytics themselves

For more information, please visit: www.creditinfo.com

Authors:

Seth Marks – Regional Director Central, Eastern & Southern Europe, Creditinfo Group

Ivo Vallau – Open Banking Product Manager, Creditinfo Group

Creditinfo appoints TransUnion veteran as new Global Chief Commercial Officer

Seasoned commercial leader, John Cannon, looks to use wealth of financial and executive leadership experience in new role to unlock new value for customers and drive Creditinfo’s international growth

London – 18 April 2024: Creditinfo, a global service provider for credit information and risk management solutions, has today announced the appointment of John Cannon as its Global Chief Commercial Officer (CCO). With over 25 years of experience in finance and credit bureaus, John will spearhead the strategy and execution behind Creditinfo’s solutions and products for all 30 of its credit bureaus, which are spread across 50 different countries.

John brings almost three decades of experience in leading top-performing teams, delivering pioneering solutions, and galvanising high-value market leading companies within the global financial community. A reputable industry expert, John led Transunion’s GFS business for international regions and has spent the last couple of years as an advisor to Private Equity firms in addition to helping scale early stage technology companies, most recently Xapien.

As CCO of Creditinfo, John will draw on his extensive sector knowledge and experience to leverage Creditinfo’s technology and data to push innovation forward and ensure it meets customer expectations and needs. He will play a key part in promoting financial inclusion globally and in doing so bolster Creditinfo’s international growth. In his new role, John will also be responsible for delivering the right products and services to Creditinfo’s customers to maximise value, as well as identifying new business opportunities. 

John Cannon, newly appointed Global Chief Commercial Officer at Creditinfo said: “I’m delighted to join Creditinfo, a company that is committed to enriching people’s lives through unlocking access to financial inclusion. This, and its international culture, is what drew me to the company. I look forward to working with the remarkable Creditinfo team to support the next phase of its growth journey.”

Satrajit Saha, Global CEO at Creditinfo said: “With firm roots in the global financial industry and a strong track record as a senior executive leader, John is an excellent addition to our senior leadership team. As we look to expand our global footprint and facilitate access to finance for millions of consumers and businesses worldwide, having John on board is a huge advantage, not only for our own innovation and growth but also for our customers as they turn to us to provide worldclass and transformative solutions and products.”

John will report directly to Satrajit Saha, Creditinfo’s Global CEO.

-END-

About Creditinfo

Established in 1997 and headquartered in London, UK, 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 

ICRA and Creditinfo Tanzania launch first credit rating agency for Tanzania institutions

Dar Es Salaam, 24th January 2024 – Creditinfo Tanzania, provider of credit information and risk management solutions, and ICRA (International Credit Rating Agency) have partnered to launch the ICRA Rating Agency, the first credit rating agency locally based in Tanzania.

The joint venture will provide credit rating and evaluation services to Tanzanian financial institutions, creating for the financial industry. Combined, ICRA and Creditinfo’s Tanzania team bring decades of experience and practical knowledge in credit risk management and analysis to support and improve credit assessment in Tanzania.

Adv Hassan Mansur, Local Director of ICRA Rating Agency Limited said: “We are delighted to launch Tanzania’s first credit rating agency that is fully geared towards strengthening the economy through providing credit rating services that are tailored to the African market. Our partnership with Creditinfo will provide ample opportunities and offer a competitive edge for various institutions, most especially the Tanzanian institutions in the International Market.”

Edwin Urasa, CEO of CreditInfo Tanzania said: “At Creditinfo, we are committed to sustainably growing our business and identifying ideal opportunities to build strong and profitable credit rating agencies, while helping more local citizens and businesses access finance. Our partnership with ICRA marks an important milestone for us and gives us the opportunity to improve the standards of credit assessment. Tanzania is an optimal market for us to introduce this service because of its tremendous promise for inclusive financial services. This venture will set a new standard in credit rating and promote financial health and empowerment across Tanzania.”

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About Creditinfo  

Established in 1997 and headquartered in London, UK, 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 tz.creditinfo.com

www.creditinfo.com

About ICRA Rating Agency

ICRA Rating Agency Limited has been accredited for being the First Ever Credit Rating Agency approved by Bank of Tanzania (Central Bank of Tanzania) to which we are the only regional central bank approved credit rating agency offering credit rating services. Our organisation also gets the special status of ecai (external credit assessment institution).

ICRA has an expert team with a combined experience of more than 25 years in Audit, Inspection, Financial Analysis, Credit Research, Banking, Compliance, AML and Certification. Our ratings significantly influence corporate and financial institutions to achieve better market standing. ICRA ratings aim to help various corporations and institutions demonstrate their financial capability.

For more information, please visit www.icrallc.com

Creditinfo Estonia’s sanctions’ monitoring solution for small businesses

Such companies, whose daily economic activities do not deal with continuous customer background research or transaction monitoring, can sometimes be in a difficult situation where they do not have enough know-how or manpower resources to assess the risk of whether one of their customers or partners falls under the established restrictions or not.

Finding such a necessary workforce is always possible, but as you know, making such a fixed cost can sometimes be impossible according to the company’s business model. In this case, one of the options is to delegate the control of said risks outside the company or to use convenient and straightforward, but at the same time reliable services to help with this task, which are available on the market.

For these cases, Creditinfo is offering small businesses the opportunity to mitigate their risks in two ways – by delegating the checking of compliance with sanction lists for their customers and partners entirely to us or by using a straightforward and convenient solution on our e-Krediidiinfo portal – WebScreening.

The web-based service WebScreening allows you to request the entry of a person of interest to you through a convenient and comprehensive user interface, both on international sanctions (European Union and the United Nations) and watch lists (so-called local sanctions and “black lists” of various countries, in some instances, for example, wanted persons) as well as persons with a national background ( PEP) from the lists.

With additional functions, it is possible to perform user management in the portal (if the company has more than one user) or view the archive of requests made. At this point, it is good to note that the archive of performed requests is convenient to use, for example, to check the performance of the employee’s duties and prove the requests made to the supervisory authority, if necessary.

Access to customer bank transaction data provides a basis for more intelligent business decisions

Creditinfo appoints Satrajit Saha as new Global CEO

Former CEO of TransUnion Europe – Satrajit Saha – brings his expertise to Creditinfo, planning to drive growth across its credit bureaus globally.

London – 29^th November 2023: Creditinfo, a global service provider for credit information and risk management solutions, has today announced the appointment of Satrajit Saha as its Global Chief Executive Officer (CEO). With over 20 years of experience in banking and credit bureau, Satrajit will drive the growth of Creditinfo and the maturity of its credit bureaus globally. He joins the company from TransUnion Europe, where he held the position of CEO for the last five years.

In his role, Satrajit will lead Creditinfo in advancing its strategic initiatives, with a particular focus on promoting financial inclusion worldwide. Drawing on his rich background in the credit information industry, spread across Asia, Africa, and Europe, he will lead the next phase of Creditinfo’s growth on a global level as it strives to become a truly global bureau and the leader for facilitating access to finance in both developed and emerging markets.

As an experienced strategic leader, Satrajit has an impressive reputation in the financial services space. At TransUnion Europe, he led the board of all TransUnion’s European owned entities. Before joining TransUnion Europe, he was Chief Business Officer at TransUnion India, where he was responsible for crafting and executing TransUnion’s CIBIL’s market strategy. He was also Cards Head, Africa Region, at Barclays Bank.

Satrajit Saha, newly appointed Global CEO at Creditinfo said: “I am honored to take on the role of Global CEO at Creditinfo, a company that is at the forefront of promoting financial inclusion. Together with the talented team at Creditinfo, we will continue to leverage innovative data sets and solutions to bridge information gaps and create opportunities to facilitate access to finance for individuals and businesses globally.”

Monty Ismail, Director at Levine Leichtman Capital Partners and Creditinfo Group Board member said: “We are delighted to welcome Satrajit “Satty” Saha as our new Global Chief Executive Officer. He is an accomplished executive with successful leadership experience relevant to our business, including his time as CEO of TransUnion UK. Today marks the beginning of a new chapter for Creditinfo, and we are excited to see Satty, with extensive knowledge of our key markets, take over as CEO. We are looking forward to working with Satty in continuing to expand our global footprint and unlock access to finance for millions of consumers and businesses worldwide. On behalf of the Board of Directors, I would like to thank Paul Randall for his important contribution as CEO. He has been key to our success, and we are all grateful for his leadership and dedication.”

He will begin his new role as Creditinfo CEO on 1^st January 2024 and will report directly to the Creditinfo Group Board.

-END-

About Creditinfo

Established in 1997 and headquartered in London, UK, 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 

One in five construction companies on the brink of bankruptcy in Lithuania

As shown in a recent analysis of the construction sector conducted by Creditinfo Lietuva, almost a fifth (18%) of construction companies¹ are currently on the brink of bankruptcy, while almost a third (31%) are at risk of defaulting on their payments. According to publicly available data², construction companies, as a whole, exhibit shorter operating histories and offer lower wages compared to other sectors. Financial experts are therefore advising caution when engaging with construction firms.

There are currently 19,167 construction companies in Lithuania, employing almost 108,000 people. The numbers of construction companies and their employees have shown consistent growth since 2020. In 2020, there were 16,144 construction companies with an employee count of nearly 102,000. By 2021, the numbers had risen to 17,171 companies and over 102,000 employees, and at the beginning of 2022, the sector boasted 18,512 companies, employing in excess of 106,000 people.

The average age of a construction company CEO is  about 46 years, with a striking 87.5% of these leaders being male. Compared to other sectors, construction companies have a comparatively shorter average lifespan in the market, standing at 10 years, in contrast to the national average of over 13 years.

Despite witnessing among the fastest growth in the current year, salaries for construction workers still lag behind the Lithuanian average. According to data from Sodra, construction worker wages surged by 22% year-on-year in the second quarter, reaching EUR 1,300 before tax (EUR 880 net), while the average earnings of full-time workers across Lithuania rose by 12.3% year-on-year, amounting to EUR 1,980 before tax.

The risk of bankruptcy among construction companies is twice as high as the national average

Currently, 18% of construction firms fall into the high and highest bankruptcy risk categories, compared to 20% at the beginning of this year and 19% at the beginning of 2022. The high and highest risk classes of late payment now account for 31% of construction companies, up from 37% at the beginning of 2023 and 34% at the beginning of last year.

For all companies in Lithuania, excluding the construction sector, 9% of all companies in the country were in the high and highest bankruptcy risk classes at the beginning of 2023, compared to 12% at the beginning of 2022. At the beginning of this year, 17% of all Lithuanian companies belonged to the high and highest risk classes of late payment, with 21% at the beginning of 2022.

“Although the construction sector has experienced a period of growth in recent years, it is particularly sensitive to borrowing conditions, fluctuations in demand and geopolitical changes. During the pandemic, builders experienced a boom in demand – with many people deciding to improve their homes – low energy prices and relatively cheap borrowing. Subsequently, the construction sector encountered a number of challenges stemming from disrupted supply chains and the need to withdraw from cooperation with sanctioned countries,” explains Ekaterina Rojaka, Head of Business Strategy and Development at Creditinfo Lithuania. “In recent months, with the European Central Bank raising its base interest rates, borrowing has become a more costly affair, reducing people’s ability to borrow, and homes built with credit have been slower to sell.”

This year, bankruptcy proceedings were initiated for 136 construction companies

Since 2007, a total of 44,256 construction companies have been declared bankrupt in Lithuania. The highest number of bankruptcies occurred in 2009 (445), 2016 (351) and 2017 (367). Only in 2007 was the number of bankruptcies below 100, with a total of 67. In Lithuania, 163 construction companies faced insolvency in 2020, 131 in 2021 and 237 in 2022. In the first 8 months of this year alone, 136 construction companies in Lithuania have declared bankruptcy.

As of the beginning of September this year, there were 11,512 construction company debts on record, collectively burdened with nearly EUR 90 million in debts, with 962 new debts registered in the first 8 months of the year, according to the credit bureau systems. The average size of a single debt is EUR 7,800.

“When entering into contracts with construction companies, it is advisable to pay more attention to their risk assessment and to clearly negotiate payment terms,” Rojaka commented.

According to data provided to the Centre of Registers, the top 10 construction companies with the highest revenues last year are: YIT Lietuva (EUR 140.6 million), AB Kauno Tiltai (EUR 134.4 million), Conres LT (EUR 100.1 million), Autokausta (EUR 83.2 million), Tetas (EUR 79 million), Staticus (EUR 75.9 million), Merko Statyba (EUR 70.4 million), Žilinskis ir Co (EUR 68.7 million) and INGUS (EUR 63.9 million).

Almost one-fifth (19%) of companies in this sector have not yet submitted their financial statements for 2022.

According to Rojaka, state orders and building modernisation programmes will support the construction sector’s activity in the near future, as demand for real estate slows down. However, falling demand has only a limited impact on the final prices of construction services, as cheaper building materials do not compensate for the sector’s rapidly rising wages, which account for more than a quarter of total construction costs. As a result, construction continues to become more expensive, with a 3.7% year-on-year increase in construction costs in July, with the fastest increase in building repair costs, which rose by 9.2%.

More information:
Jekaterina Rojaka, Head of Business Strategy and Development at Creditinfo Lithuania (jekaterina.rojaka@creditinfo.com)

Or visit: lt.creditinfo.com/en

Notes:

¹ In this report, construction companies are defined as companies that have publicly declared to the State Data Agency (SDA) the activity codes of Section F (41-43) of NACE2 as the company’s main activity.

² The data in this press release is based on information publicly provided by the State Enterprise Centre of Registers, SODRA, the State Data Agency (VDA), and other sources.

Creditinfo designated “High Overall Maturity Score” ESG rating by Anthesis