IOU Financial Releases Financial Results

IOU Financial Inc (TSXV:IOU), a leading online lender to small businesses announced today its results for the three month period ended March 31, 2018.

The company’s net earnings on IFRS basis and adjusted net earnings amounted to $0.8 million in Q1, 2018 which is the second consecutive quarter that they had positive earnings.

As quoted in the press release:

“Following the positive results in the fourth quarter of 2017, IOU has delivered even stronger results in the first quarter of 2018. This is a testament to the measures taken to bring down loan defaults and control costs. IOU expects to continue to grow loan originations and generate profits over the coming quarters,” said Phil Marleau, CEO.

FINANCIAL HIGHLIGHTS

• Loan originations for the first quarter ended March 31, 2018 increased 11.2% to US$24.5 million versus originations of US$22.1 million for the same period last year.
• As of March 31, 2018, IOU’s total loans under management amounted to approximately $64.2 million as compared to $66.8 million in 2017. The principal balance of the loan portfolio amounted to $32.2 millioncompared to $43.8 million in 2017. The principal balance of IOU’s servicing portfolio (loans being serviced on behalf of third-parties) amounted to approximately $32.0 million compared to $23.0 million in 2017.
• IOU recorded gross revenue during the first quarter of $4.4 million versus $4.3 million for the same period last year.
• Interest expense during the three-month period ended March 31, 2018decreased by 11.6% to $812,535, compared to $918,658 the previous year. The decrease is attributable to a decrease in borrowings under the credit facility.
• Provision for loan losses (net of recoveries) decreased by 50.6% to $954,329 for the three-month period ended March 31, 2018. This decrease is primarily attributable to lower defaults by borrowers as well as by the smaller size of the loan portfolio. The improvement in the provision for loan losses (net of recoveries) is a result of changes made in 2017 in the Company’s lending policies and in the loan servicing and collection process, which includes an aggressive litigation strategy against businesses who default on their loan obligations.
• Operating expenses decreased 23.1% to $1.87 million for the three-month period ended March 31, 2018 as compared to $2.44 million for the previous year. The decrease is attributable to the Company’s plan to reduce operating expenses initially introduced in the third quarter of 2016. The plan resulted in reduced headcount thereby lowering employee compensation costs, a decrease in marketing costs and reduced professional fee expenses due to vendor contract re-negotiations.

Click here for the text release.