IDF Eurasia (legal name MFO OnlineKazFinance JSC) has released its IFRS financial results for 2022 (The external audit of the 2022 financial statements is ongoing and is due to be finalized in late May 2023). The company has provided the following operational and financial information:
Summary of 2022 financial performance
- Loan portfolio demonstrated 13.4% growth, reaching KZT 69.4B (€140.9M) compared to KZT 61.2B (€125.6M) in 2021
- SME portfolio demonstrated 102.2% growth, reaching KZT 32.1B (€65.2M) compared to KZT 15.9B (€32.6M) in 2021
- NPL 60+ decreased from 3.4% in 2021 to 2.6% in 2022, while NPL 90+ decreased from 2.4% in 2021 to 2.0% in 2022
- Total equity increased by 41% reaching KZT 19.3B (€39.1M) compared to KZT 13.7B (€28.1M) in 2021
- Total revenue increased by 43% reaching KZT 29.4B (€59.7M) compared to KZT 20.6B (€42.3M) 2021
- Net profit decreased by 8.9% reaching KZT 4.1B (€8.2M) compared to KZT 4.4B (€9M) in 2021
The company continued to demonstrate stable and diversified loan portfolio growth, increasing its SME share to 46.3% while maintaining profitability and credit quality. The decrease in net profit was a result of the increased cost of funding, as the Central Bank’s rate was increased by 7 percentage points over the course of 2022. The decrease was also due to additional costs associated with the banking transformation on the IT and corporate governance side.
IDF Eurasia (Solva brand) is on track to become the first SME-focused bank in Kazakhstan. OnlineKazFinance completed its transformation from a Limited Liability Company into a Joint Stock Company in December 2022, which was one of the final steps to prepare for the banking transformation. IDF Eurasia (Solva brand) finalized its new Board of Directors with 3 Non-Executive Directors. This board includes Mr. Michael Weinstein, a former senior banker at the European Bank for Reconstruction and Development, with the goal of a raise in transparency. The conversion process from MFI into a bank is expected to be finalized in Q3, 2023. The company enhanced its corporate governance and client protection efforts by restructuring its Ombudsman and quality control department to be supervised directly by the Board of Directors. The Board of Directors was fully restructured and now consists of 5 members, with 4 being independent. In late 2022 and 2023, the company joined CERISE and SPTF global initiatives, and is now on the list of committed providers. IDF Eurasia (Solva brand) became the first Kazakhstan company to join the 2-time global initiative on women financing to advance a gender-responsive approach and to gain additional access to the international impact community. IDF Eurasia (Solva brand) significantly enhanced and formalized its ESG agenda, with a focus on inclusive finance and client protection.
According to Eurasian Development Bank’s macro-outlook, the economy of Kazakhstan successfully navigated the 2022 crisis. The launch of new O&G capacities and growth of industries for Services and Production, along with the stimulating fiscal policy, shows a positive trend for the Kazakhstan economy with the following forecasts:
- GDP is expected to grow by 4.2% in 2024 and 2023, compared to 2.8% in 2022.
- The key rate is forecast to decrease from 16% in 2022 to 14% in 2023 and 10% in 2024.
“Solva is becoming not only a leader in technological transformation in Kazakhstan, but also a flagship of ESG initiatives in the financial sector. We are proud of the impact our Company is introducing for the society and we aim to follow global United Nations principles and development goals in our strategy – this is especially crucial as we plan to become a fully licensed bank supporting entrepreneurs and broader SME segment in Kazakhstan. We also believe that our investors are mindful of Solva’s inclusive finance aspirations and positive influence for the overall economy, so we’ll continue our ESG journey with further initiatives. In 2023 our focus is on development of green finance franchise.
Solva is also making the last steps to get a banking license this year – we have already converted into JSC and significantly improved our corporate governance, having created additional internal committees and independent audit and control function, restructured client protection department and finalized Board of Directors composition. We are now in constant dialogue with the Regulator to get the final green light for transformation.
On the financial side Solva maintains stable positions with healthy profitability, conservative approach to portfolio credit quality and safe cushion in a form of capital, which is also supported by or S&P Global rating on the level of B- with stable outlook.
In terms of further debt financing, we plan to shift our funding base more towards local KZT currency to avoid increased foreign currency risk and to decrease overall cost of funding, as we won’t be required to hedge FX risk. Banking transformation will also help us to raise retail and corporate deposits allowing to further diversify funding sources.”
IDF Eurasia (Solva brand) would like to thank their valued investors on Mintos for staying with them over the past year as they kept their promise to settle the accumulated pending payments. As compensation to Mintos investors for the late payments, the company has repaid extra interest in a total of EUR 2.4M over the past 12 months.
About IDF Eurasia (Solva brand)
IDF Eurasia (Solva brand) operates under the brand’s Moneyman and Solva. It makes borrowing money convenient and affordable for anyone with an internet connection. The company uses state-of-the-art technology in its decision-making system, adheres to principles of responsible lending, and contributes to the sustainable financial development of society. IDF Eurasia (Solva brand)has been recognized as the most innovative financial company by the Innovation Time Award. Solva has entered the list of top five major MFIs according to the National Bank of Kazakhstan.
