Our business model
Average loan term by market (weeks)
Our philosophy is one of maximising the lifetime value of customers rather than driving volumes and growth in an uncontrolled manner. We believe we are far more likely to grow profitably over the long term if we build sustainable relationships with quality customers.
Over the last 11 years our home credit business model has proved itself to be resilient, flexible and profitable.
Our regular contact with customers through agents allows us to understand their needs and circumstances and to rapidly adjust our lending decisions. Our policy of not charging additional interest or penalty charges on the majority of loans to customers who miss payments allows us to help customers through difficult times. Part of the resilience of our business is also attributable to the short-term nature of its lending. On average we have less than six months of receivables outstanding at any time which means we can change the risk profile of the loan book very quickly. All of this adds up to a business model that is well placed to succeed in the long term and weather economic downturns along the way.
Our philosophy is one of maximising the lifetime value of customers rather than driving volumes and growth in an uncontrolled manner. We believe we are far more likely to grow profitably over the long term if we build sustainable relationships with quality customers. To achieve this we employ a ‘low and grow’ strategy, which typically involves offering customers a relatively small value first loan (£100 to £200 on average) over a term of less than a year; and only increasing the size and length of the loan when they have demonstrated that they are a good payer.
Credit decisions, supported by our powerful suite of credit management tools, are based primarily on the customer’s ability to repay, taking into account all of their regular income and expenses, and not on the value of their assets – all of our lending is unsecured.
This business model is applied consistently in all of our markets although we have demonstrated our ability to be flexible and modify the model where necessary. Our new flexible products are being rolled out across all markets in 2009.