Swaper in a close cooperation with the loan originators, is responding effectively to the current coronavirus health crisis so that neither investors nor customers are affected. Loan originator’s management has a wide international experience and has demonstrated to Swaper that they have strengthened considerably their risk management policies during the last weeks.
Summary of performance during COVID-19:
- There are no delays in outstanding payments on Swaper platform.
- Swaper together with the loan originators are constantly monitoring the situation and acting accordingly to protect the investors.
- All loan fluctuations are recorded in each country.
- Swaper increased interest rates for investors. We believe that even in the current conditions, there is still room for increasing interest rates and remain profitable.
- Contact with lenders has been maintained for daily updates.
Investor portfolio protection
Now, despite the delicate market situation, we can assure that our results are not only good but also encouraging. In the last few weeks, we strengthened our risk management efforts and fully reviewed our risk policy. We can now clearly see the results and despite the volatile situation on the market, our risk performance is at a record low level. These actions were done on purpose, therefor from a risk mitigation perspective we have made very strict selection of the customers.
We use FPD5 (First payment default, in this case, on the 5th day after repayment date) – as an indicator of an early performance of loan portfolio, we can already judge by loans issued in February.
All loans issued during the month of February have their due date in the current month of March. If we look at the numbers, the FPD5 for Poland have dropped by 1,02% comparing to January. And the result of February is better than average of year 2019 by 6,71%. In Spain, the FPD5 stands of February is lower by 1,77% if comparing with January of this year and lower by 5,09% than the average for year 2019. These data clearly indicate an increase in overall performance.
Despite our good performance from a risk perspective, we remain cautious about the pandemic situation. That is why we have implemented a series of more prudent measures to protect investor portfolios. Although it is too early to give figures for March, we have already drawn up a further action plan for our portfolios:
- we have tightened credit policy to further improve risk;
- we are also mitigating affordability risk by lowering limits, that will further strengthen and protect our portfolios.
All our efforts are geared towards taking a new approach to the market situation and working with our customers hand in hand. That is why we have launched a series of tools to make the particular circumstances of each one as flexible as possible. Our aim is none other than to help clients with their finances in these dramatic times. The offers we make include discounts and payment deferrals.
This week also some legislation changes are expected to come into force in Poland. The government is taking temporary measures for a limited period of time, to temper the pressure of financial consequences of this crisis. The main changes will include the decrease of interest cup for short term loans. Already in the last week our loan originators in Poland started to prepare for these changes and this week they are continuing the work to adjust to the new requirements. This will require new risk policy adjustments as well and these requirements are already being prepared to adjust to the new conditions.
Actions taken to improve liquidity
Over the past few weeks, we have put a lot of effort into the collection, which has allowed us to increase working capital and improve liquidity. By temporally postponing new projects and expansion plans we have been able to:
- Improve internal processes to achieve costs of up to 35% of the total. The reduced costs are primarily related to marketing and promotional activities, which in the current economic climate are scaled down.
- With a direct involvement of our employees we managed to make our organization leaner and flatter, which permits us to further decrease up to 40% of monthly personnel related expenditures.
- Reduce external IT and database costs by up to 50%.
- Place all of our new products and market expansion plans on hold.
- Agree acceptable payment terms with creditors applicable to existing obligations. In some cases, these conditions have been improved.
We would like to point out that these are temporally measures made until the situation globally improves.
We care about the employees
If there is anything important in the company, it is the team. Therefore, all employees continue their work from home, respecting quarantine and in optimal working conditions. Their health and well-being are the most important thing.
As sales activity has decreased, we have shifted some of the staff to the collections department. There we consider that all our efforts should now be there. We have also overlapped responsibilities to better control personnel expenses and the current organizational structure has been revised.
In case of any other questions do not hesitate to contact us.