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TBIH Financial Services Group NV

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Consumer leasing was started only in 1998 volumes are still small and there ... Overdraft facilities as part of framework agreements with employers. Credit cards ... – PowerPoint PPT presentation

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Title: TBIH Financial Services Group NV

1
Strictly Private Confidential

March 2004 Presentation to ADVENT
2
Consumer Leasing in Bulgaria?

UNDERDEVELOPED MARKET
Consumer leasing was started only in 1998
volumes are still small and there are only few
players
Key success factors presence in the retail
network, funding, products
Successful underwriting is crucial
SUBSTANTIAL GROWTH PROSPECTS
Consumer leasing is becoming a vehicle for people
to acquire consumer goods
Sizable market (8 million people) - financing
needs of individuals are considerable and not
covered by the banks
In the Bulgarian market banks can serve only a
small part of potential consumer finance clients
PROFITABILITY
Net margins will likely remain high

3
BULGARIAN CONSUMER LEASING MARKET

Main players
Independent with national presence TBI Credit,
Euroline and Jet Credit
Regional small and not able to grow, expensive
Banks now active in consumer lending limited
to prime credit risk clients
Market Share

4
FUTURE MARKET TRENDS

Demand and business volume will increase
The product range of leased goods will broaden
Retailers/distributors will continue to
outsource the leasing service
Companies will move into consumer finance and
other products
Risk management will improve - launch of credit
bureau, more track record, etc.
Interest rates will decrease
Banks will play an increasing role, especially
in the prime market

5
About TBI Credit EAD

Established in 1998 as Telervis Bulgaria AD and
acquired by TBIF in November 2002
The leading provider of consumer leasing in
Bulgaria
about 45 market share
presence in over 700 merchants in over 71 cities
in the country
Client base of over 150,000 with 110,000 active
contracts
Powerful IT system
Proven track record, working business model and
sustainable profitability
Well developed risk management procedures

6
TBI Credit EAD Performance Highlights

Performance highlights Year 2003
Number of active contracts over
110,000
Total portfolio outstanding-Dec03 Euro
17.8 million
Total turnover for 2003 Euro 27
million
Number of contracts for 2003 82,155
Number of contracts for December03 14,044
Average value of leasing contract Euro 390
Average contract duration around 12 months
Number of retail partners 700

7
TBI Credit EAD PRODUCT FOCUS

Consumer leasing
The following pie chart represents the volumes of
5 main groups of products
Financing of distributors and retailers
Assist our retail partners to increase their own
sales and the leasing through TBI Credit

8
TBI Credit EAD PRODUCT FOCUS (2)

Consumer finance
First stage Consumer funding to pre-selected low
credit risk clients
TBI Credit good clients with track record
Doverie pension fund members (around 1 million)
Clients with life insurance policies as
collateral
Employees of the TBIH corporate clients
Second stage Extend the product to other
clients
Revolving credit for consumers
Store cards
Overdraft facilities as part of framework
agreements with employers
Credit cards

9
TBI Credit EAD Product Distribution

Retail network
Contracts with over 700 POS in 71 cities
Cross-selling with other TBIH companies
Over 150 offices throughout Bulgaria
Client database of TBIH sister companies
Repeat sales to the best TBI Credit clients
Joint loyalty programs with key partners
E-channels

10
Modus Operandi

Rigorous selection process and underwriting
Leasing application
Data verification, including personal visits and
employment verification
Limited number of leasing contracts per client
Tracking
Strict monitoring of payments and active
collections measures
High efficiency over 450 contracts per day
signed
Risk insurance
Close co-operation with retailers and
distributors
Powerful IT system
Development of an expert risk management system

11
IT SYSTEM

The introduction of a new, Oracle-based software
ORA TBI was commenced at the end of 2003. The
system
is based on an Oracle 9 database, giving greater
possibilities at operational level and with
regard to the processing and storage of an
enlarged volume of data by means of fewer
resources
allows work from remote terminals with a greater
level of data protection and minimum amount of
traffic
operational flexibility during data processing
can be used for reporting purposes in connection
with all financial products offered by TBI
Credit
quick and relatively easy to adapt to the dynamic
changes in the companys activities

12
RISK MAMAGEMENT EXPERT SYSTEM

The expert system will be based on the credit
history contained in the companys database,
reflecting the cumulative knowledge gained from
the companys experience on the market.
The expert system will allow for
evaluation and analysis of the achieved results,
in regard to the delayed payments and reflecting
the different products, regions, representatives,
etc.
prevention of default as a result from the
findings from above
optimising the costs of monitoring, prevention
and control
Additionally the system will provide the company
with a major competitive advantage on the POS
credits and consumer finance market, allowing for
immediate reply to the client
Final implementation expected mid 2004

13
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14
STRUCTURE AND FUNCTIONS OF THE SALES AND
MARKETING DEPARTMENT

More than 700 retail partners in 71 cities in
Bulgaria
Close cooperation with all TBIH companies
throughout Bulgaria
The major marketing functions performed include
establishing and maintaining clients relationship
with both retailers and individuals
approaching potential retail partners and
presenting to them the financial product offered
negotiating and drawing-up the contracts with
retailers
provide trainings to retailers
representativesconcerning terms of financing
flow of operations and documentation flow,
operational support provision if needed when
sales to end client performed
follow up procedures and monitoring of retailers
performance, in term of
number of contracts generated
quality of contracts generated
implementation of systems for retailers
evaluation and ranking
development of incentive schemes for retailers
with satisfactory performance
developing new products
collecting information about the competition on
the leasing and consumer finance markets and
initiating response activities

15
RISK MANAGEMENT

General eligibility requirements
General exposure limit
max BGN 3,000 per clients for consumer finance
max BGN 10,000 per client for POS credits
General terms
between 3 and 18 monthsfor consumer finance
between 3 and 24 months- for POS credits
General requirements
max installment due- ¼ of net monthly income
clients with positive track record preferred
TBIH Group employees preferred
individuals with Bulstrad insurance preferred
Doverie Pension Fund members preferred

16
RISK MANAGEMENT

Financing individuals analysis criteria
Capacity of Payment
Net income, Family Income
Job, company, employment details
Age, Marital Status, family members supported
Properties owned (house, car, land, others)
Debts (loans, rentals payable, etc.)
Second contact person details
Financed amount
Total exposure to a client
Asset details (if applicable, e.g. for leasing
contract)
Down payment
Asset value
Re marketing potential
Difficulties in re possession

17
COLLATERALS REPOSSESSION OF THE LEASED ASSETS

COLLATERALS USED
Promissory notes
Direct debit as payment instrument-applied for
the consumer finance product
Additional guarantees required for higher risk
files, regarding clients solvency or type/value
of leased assets.
REPOSSESION OF THE LEASED ASSETS
Leasing contracts empower the Lessor with
execution title, according to Bulgarian Laws
Leased assets repossessing procedure can be
initiated after 60 days of delays, according to
leasing contract
Legal procedure can start at the same time with
enforcing promissory notes with execution rights.
Thus, there are two parallel ways of recovering
bad debts. After remaining amount is recovered,
leasing company will return any surplus in forced
execution

18
OPERATIONS DEPARTMENT

RESPONSIBILITIES
Negotiations with client and questionnaires
preparation are held at the representatives
shops throughout the country
After receiving an approval from the Head office
the authorized representative is checking the
client status based on the questionnaire
The contract signed together with the down
payment collected from the client are to be sent
to the Head office
Leasing contracts data input into the database
Payments to suppliers are ordered
Registration and insurance of the leasing
contracts collected
Follow-up of the lease payments
Draw all the necessary reports for management
purposes regarding clients in delay, default
clients, etc.

19
ACCOUNTING DEPARTMENT

RESPONSIBILITIES
CONTROL functions
Control and coordination of payment and
collection activity
Coordinate the budgetary process of the company
Periodically produces variance report
highlighting any departure from the budget
Coordinate the bank loans applications
Organize and coordinate internal audit activity
Assure the accuracy of the software records

20
TBI Credit EAD Turnover per month
21
TBI Credit EAD - Number of contracts per month
22
TBI Credit EAD Outstanding Investment in Leases
23
Financial Highlights 2002-2003
24
TBI CREDIT EAD FINANCIAL HIGHLIGHTS 2002/2003
25
TBI CREDIT EAD FINANCIAL HIGHLIGHTS 2002/2003
26
SWOT ANALYSIS

STRENGHTS
Member of a Group specialized in providing
financial services
Leader in consumer leasing
Efficient organisation of work, well developed IT
and strong monitoring flexibility and user
friendly
Strong distribution network, brand awareness and
good reputation among distributors
Substantial client base
Good relationship with financial institutions