Quick loan market quite wild

Photo: Panther Media / Scanpix

The local quick loan market involves a dozen companies or so. Mainly, these fall under the SME-category with turnovers of a couple of million euros.

As many would have noticed, the quick loan peddlers are becoming active, even aggressive in various advertisement channels. The reason? Christmas is coming.

«Every year, in fourth quarter, consumption drastically increases, active sales and ads go up in retail; that, in turn, serves to activate those offering consumer loans, credit cards, and leasing to clients,» said Credit24 CEO Rain Sepp. «Thus, the momentary abundance of ads may rather be explained by the active sales period,» he added.

No data

No precise data is available regarding numbers of quick loan companies, their customer base and size of market. As revealed by annual reports by enterprises, the market is actually quite small and fragmented.

«It is hard to pinpoint the exact number; in my estimation, there still are more than one serious players on the market, rather,» Rain Sepp answered the question posed by Postimees.

Overview of fast loan providers is lacking because these undergo no uniform supervision. As Financial Supervision Authority only supervises credit institutions which receive deposits, fast loan providers escape the scrutiny.

The sole exception is Bigbank, now with banking licence, issuing both consumer loans and quick loans; as well as the Norwegian credit and financial services provider Folkia, operating under the Monetti trademark and having a branch in Estonia since start of 2010.  

Under Norwegian law, Folkia is required to have an Estonian banking licence, and the company is submitted to Norwegian banking supervision, reads the fast-loan-company website.

The biggest one on the quick loan market is Bigbank, its last year’s net interest income being €38.3m. According to annual report, 37 per cent of earnings came from Estonia; in addition to Estonia, they have loan offices in various countries.

More to come

Last year, sales revenue of Placet Group, acting under trademark of SMSraha, increased by 70 per cent to €5.31m. The company’s profits rose 68 per cent, to €1.45m. Based on last year results, Placet Group (SMSraha) looks like the most successful of the fast loan peddlers. The company belongs to Tallinn businessmen Aleksandr Kostin and Sergei Astafjev.

Last year’s turnover of Raha24, owned by various businessmen, amounted to €1.72m, securing €0.83m in profit. As for the rest of companies active in the field, their incomes are about a million euros.

Even with newcomers added yearly, Rain Sepp claims the Estonian consumer loan market is rather stabilised. «In Estonia, the sector has rather converged to the bigger players,» said Mr Sepp. «The newcomers, trying to have a go, keep showing up from time to time; time will tell who will stay and who will go,» he added.

«I believe that, mostly, those more client oriented will be standing out, such as MCB Finance who desired to do it long term, steadfastly developing and improving their services. Companies with like thinking and strategy will surely be our competitors both today and in years to come,» said Mr Sepp.

Customer base of fast loan providers also remains somewhat of a mystery. According to an Emor study ordered by Eesti Pank a year ago, fast loans have been embraced by two per cent of Estonian households, meaning at least 12,000 families have committed the act.

The actual number of those taking fast loans may be bigger, as, according to Jaana Helm of Emor, people are quite unwilling to talk about fast loans.

According to Rain Sepp, the figure is bigger indeed – in Estonia, they have 100,000 customers, he claims. «Regarding consumer loan market, media has mentioned differing numbers; it is hard for me right now to provide an exact estimate. But Estonian customer base of Credit24 has by today, grown to 100,000 clients,» stated Mr Sepp.