Activities H1 2009 -...

Since its establishment

, AMCC is a full member of FENCA –

Federation of European National

Collection Associations.

Through AMCC,

Romania became the

15th Member of FENCA.

About AMCC

AMCC’s mission is to represent its members at national and international level, to promote the concept of credit services management and support it in the national legislation.

AMCC wants to be a national representative association for debt collection agencies in Romania and to implement a high standard of quality in the management of receivables.

The main purpose of AMCC isto regulate the profession and toset professional ethicalprinciples to be followed bydebt collection companiesin relation to retail andcorporate debtors.

AMCC’s scope:

3

Members AMCC

AMCC was founded in 2007 at the initiative of Coface, EOS KSI and Creditreform.

Currently brings together 17 members.

4

Agenda

What is debt collection?

Debt collection market evolution and trends in S1 2018

Romanian B2C debt collection market:

B2C – Serviced debt

B2C – Purchased debt

Romanian B2B debt collection market

International collection

Continuous improvement measures

5

A debt collection agency acts as an intermediary between a debtor and a creditor. It can facilitate a payment schedule for the debtors.

The communication between the collection agents and the debtors is the quickest and easiest way to solve the debt situation under conditions that are favorable to all parties.

Debt collection agency

Creditor Debtor


Why do companies choose to externalize debt collection?

A possible answer would be due to legislation (e.g.: prudential rules regarding non-performing loans), cash flows constraints and decisions to increase operational efficiency can lead to debt collection externalization.

A creditor can have two categories of clients, B2C and B2B.

B2C clients are natural persons (e.g. people who have a telecom subscription, etc.)

B2B clients are legal persons (e.g. companies/NGOs that receive loans from banks, etc.)

/

Debt collection process

Who are the companies (creditors) that refer collection of debt?

Who is a debtor?

Banking institution

Telecom companies

Leasing

Insurance

FMCG

Universities

Pharma etc.

Natural persons (employees, students, etc.)

Legal persons (limited liability company, corporations, etc.)

Rights over the debt are referred to a debt collection agency or a consortium of companies.

Collection is taken over by the company which owns the rights over the debt.

Rights over the debt are kept by the creditor

Debt collection operations are performed by the contracted company, in return receiving a fee, according to the service agreement.

Discussions with the debtor include:1. Identify solutions for payment of debt;2. Decide on the best option for both the

debtor and the creditor; 3. Agree and sign a written agreement based

on previous discussions.

How is debt transferred to debt collection companies?

a. Purchase rights for the debt (Debt purchased)

b. Collection based on success fee (Debt Serviced)

What does this mean for the debtor?

How is the debtor contacted?

Phone calls E-mail Written

correspondence Field activities

What is the general approach?

Cr

ed

ito

rD

eb

tor

7

Field collection and legal in-house services are among the least used services by the members in S1 2018

Debt collection services

Services provided for the B2C sector: All of the respondents use call-center services, SMS, written correspondence & e-mails to communicate with B2C clients.

Services provided for the B2B sector: Similar to B2C services, e-mail and written correspondence services with call-center services are being used by all respondents. As in S1 2017, field collection is among the least used services for B2B collection.

100%

100%

100%

100%

93%

79%

71%

57%

100%

100%

100%

92%

92%

92%

77%

69%

0% 20% 40% 60% 80% 100%

Written correspondence

E-mail

Call-center

SMS

Coordination of enforcement procedures

Skip tracing

Legal in-house

Field collection

Type of services offered - B2CS1 2018 vs. S1 2017

S1 2018 S1 2017

100%

100%

100%

92%

92%

85%

69%

54%

100%

100%

100%

100%

100%

83%

67%

58%

0% 20% 40% 60% 80% 100%

Written correspondence

E-mail

Call-center

SMS

Skip tracing

Coordination of enforcementprocedures

Legal in-house

Field collection

Type of services offered - B2BS1 2018 vs S1 2017

S1 2018 S1 2017

8

-4% -4%

11%

-1%

-40%

-20%

0%

20%

40%

60%

80%

-

500

1,000

1,500

2,000

2,500

3,000

S2 2015 S1 2016 S2 2016 S1 2017 S2 2017 S1 2018

Total number of employees by service performed (full & part time)

S2 2015- S1 2018 evolution

B2B Debt collection

Legal Debt collection

Field collection

Others (IT, Accounting, Financial, Sales, Marketing etc.)

B2C Debt collection

Dynamics

2,824 2,798 2,653

16%8%

18%12%

17%

19%

18%

0%

10%

20%

30%

40%

B2CCollection

B2BCollection

Others FieldCollection

LegalCollection

Employee turnover rate by service performed

S1 2017 – S1 2018

S1 2018 Turnover Rate per ServiceS1 2018 Turnover rate for the industryS1 2017 Turnover rate for the industry

The Romanian debt collection industry employs ~2,600 people, more than half of them in the B2C & B2B collection segment

Employee structure

On a general note, the debt collection sector has registered a slight fluctuation in number of employees, between end of 2015 till the end of S1 2018.

This is mainly due to the high employee turnover and debt collectors adjusting their headcount number to the volumes referred.

B2C debt collection is the most employee-intensive function, accounting for approx. 47% of the total FTE.

2,7462,694 2,547

47%

4%25%

8%

16%

Full-time employee (FTE) structure by service performed

S1 2018

B2C Debt collection

B2B Debt collection

Others (IT, Accounting, Financial, Sales, Marketing, etc.)

Field collection

Legal Debt collection

-5%

9

In S1 2018, the total number of B2C active clients has remained the same as in S1 2017, but the industry structure has changed

Active clients

*Number of active clients was calculated at AMCC level**One client does no necessary account for a client, as a creditor can request collection services from more than one collection agency.

77 73 65

45 4542

43

1520

27

30 36

14

8 8

19

64

7

2 4

0

50

100

150

200

250

S1 2016 S1 2017 S1 2018

B2C Evolution of the number of active clients S1 2016 – S1 2018

Leasing

Utilities

Insurance

NBFI

Others

Telecom

Banking

3% 4%2%

91%

B2B - Active clients by activity sectorS1 2018

Banking

Telecom

Leasing

Other

B2C segment: The number of active banking clients has decreased in S1 2018 compared to the similar period from 2017, mainly due to uncertainties in the market regarding new regulations.

B2B segment: Most of the active clients come from other industries such as FMCG, Pharma, IT, Distribution, with a rather limited representation from Banking, Telecom and Teasing sectors.

In S1 2018, 63.1% of B2C active clients were fr0m the financial services sector (Banking, NBFI, Insurance and Leasing).``

10

Agenda







Debt collection market for international clients


11

Executive Summary (1/2)

Romanian B2C debt collection market – Serviced debt.

In S1 2018, serviced debt referred has decreased by 22% compared to S1 2017, in terms of debt value, while in terms ofnumber of cases it registered a slight increase (8%).

The value recovered from B2C cases and returned into the economy by debt collecting companies was ~74 mil EUR, a 18%increase compared to S1 2017, mainly due to optimized recovery processes and higher value/case recovered in the bankingand NBFI sector.

Average value per case for serviced debt referred in S1 2018 was 456 EUR/case, while for debt recovered was 87 EUR/case.

The most important sector in terms of number of cases referred for S1 2018 remained, as in S1 2017, the Telecom sector.

Romanian B2C debt collection market – Purchased debt.

The value of purchased debt referred decreased in S1 2018 by 59% compared to S1 2017, mainly due to lower number ofportfolios available for sale in the market.

In S1 2018, the value of guaranteed debt acquired was below 1% of the total value of B2C banking debt purchased.

Average value per case for purchased debt referred in S1 2018 was 1,519 EUR/case, while for debt recovered, 167 EUR/case

Debt collection market in S1 2018

Romanian B2B debt collection market – Serviced debt

In terms of serviced debt referred, the number of cases in S1 2018 registered a decrease of 41%, mainly due to lowernumber of cases in the banking, telecom and leasing sectors.

The average value per case for serviced debt referred was 39,448 EUR/case in S1 2018, while the average recovered valueper case was 581 EUR/case.

Romanian B2B debt collection market – Purchased debt

In S1 2018, the only sector active on the B2B purchased debt referred market was Telecom where the average value/casewas 567 EUR/case.

Debt collection players expect a rather stagnant market in terms of debtcollection for S2 2018, due to low number of portfolios for sale on the marketand new regulations that await approval which could influence the volume ofdebt referred in the future.

12

Executive Summary (2/2)

Operational performance and market regulations

Services offered. Main services provided by respondents are written correspondence, e-mail, SMS and call-centerservices. It seams that other services such as legal in house and coordinating enforcement procedures have begun to bemore and more attractive for clients.

Employee structure. B2C and B2B collection segments are the most employee-intensive sector accounting for morethan 50% of total number of employees. A growing employee category within AMCC member companies is the legal inhouse segment, which registered a ~3% increase in number of employees in S1 2018 compared to S1 2017.

Operational improvement. The respondents’ main focus for S1 2018 was to increase efficiency by standardizingprocesses and focusing on employee development, while implementing client-orientated initiatives.

Market regulations. The members are expecting that new regulations will be imposed. In turn they are planning tofocus on diversifying their service portfolio and adjust to the new requirements thus maintaining client service level.

Debt collection players have in plan during the next period to continue improving operational efficiencythrough specific initiatives (e.g. optimize core business processes, clearly define procedures, trainings foremployees, etc.) and enhance client satisfaction by providing high quality customized services.

13

B2C Collection

3,051,231

B2B Collection

3,657,203

Debt purchased

29,565,999

Total 36,274,433

Survey statistics

Total number of respondents: 14, covering a representative estimate of 70% of the total debt collection market (debt servicing and debt purchasing) and 90% in terms of debt servicing market.

The Survey was commissioned by AMCC to Ensight Management Consulting and was prepared in accordance to data submitted by each participating AMCC member.

Debt referred S1 2018 (EUR) Debt recovered S1 2018 (EUR) Revenues S1 2018 (EUR)

Romanian Market

B2C 1,063,385,288

B2B 1,248,604,129

Total 2,311,989,418

Romanian Market

B2C 185,722,655

B2B 31,077,852

Total 216,800,507

NB: Market dynamics calculated based on data from S1 2017¹ Only purchased debt

-22%

8%

4%

87%

14%

-18%

Companies that include in their portfolio of services Debt Collection:

Creditreform Romania Coface Romania Re Collection Fire Credit

Companies that include, besides Debt Collection, Debt Purchasing:

Debt Collection Agency¹ Creditexpress Romania EOS KSI Romania KRUK Romania Intrum Romania Improvement Credit Collection

Cycle European Kredyt Inkaso¹ OTP Factoring¹ Getback Recovery¹

-3%

6%

34%

9%

14

0

2

4

6

8

10

12

The expectations for the second semester of 2018 are rather reserved due to regulatory instability

Debt collection sector expectations for 2018

Major growth drivers B2C.

Mainly all AMCC members which participated in the survey stated that specific regulatory aspects will be the most influential driver for the debt collection market evolution. The population’s level of indebtedness and NBR’s strategy for NPL registered a growth in importance among members as more and more debtors will have difficulties in payments due to increasing interest rates and economical stagnation.

Major growth drivers B2B.

In S2 2018, economical (financial leverage degree and bankruptcy/insolvency cases) and regulatory (specific regulations) factors are expected to have a significant impact on the ability of Romanian companies to reimburse debt.

Expectations:

Factors as population level of indebtedness for B2C or financial leverage degree in B2B will continue to have a high impact in the debtors payment behavior, especially in the current economical context.

Among AMCC members it is expected that technology will have a more significant role within the process of collection thus improving collection efficiency rates.

0

2

4

6

8

10

12

Major drivers of the B2B Debt Collection market

Major drivers of the B2C Debt Collection market

Impact on EUR and other currency exchange rate

NPL strategy elaborated by NBR

Specific regulations to keep in mind

GDP evolution

Bankruptcy/insolvency cases

Financial leverage degree in B2B

Cultural openness to debt collection procedures

Patterns related to the consumption basket

Debt collection specific software/technology

Regulatory

Economy

Social

TechnologyImpact on EUR and other currency exchange rate

Population level of indebtedness

Unemployment

Average net salary evolution

Specific regulations to keep in mind

NPL strategy elaborated by NBR

Debt collection specific software/technology

Patterns related to the consumption basket

Cultural openness to debt collection procedures

Regulatory

Economy

Social

Technology

15

Respondents foresee in S2 2018 an increase in the number of indebted population and also customers with repayment difficulties

Market trends for the second semester of 2018

7%

50%

43%

Members perspective –Indebted population

Evolution in the next 6 months

Decrease Increase Constant

57%

43%

Members perspective –Number of customers with repayment

difficultiesEvolution in the next 6 months

Decrease Increase Constant

Indebted population: Expectations regarding indebted population level is considered to be on a growth trend, since consumption is expected to continue it’s increase. NBR’s new law that limits to 40% the indebted level of a natural person will be in force in 2019 and is expected to slightly decrease this trend in the next years to come.

Customers with repayment difficulties: The increase of the ROBOR rate will have an impact on the payment capacity of the population, as seen in the respondents’ general perspective. Thus, most of the respondents expect that the number of customers with repayment difficulties will increase mainly due to higher interest rates and the devaluation of the national currency vs. foreign currencies.

16

Sector evolution for S1 2018 has registered a increase in terms of value of debts referred (+14%) and debts recovered (+9%)

Sector evolution in S1 2018 vs. S1 2017

Sector evolution. B2B debt referred sector has registered a significant increase in terms of value of debt referred in S1 2018, compared to S1 2017. The increase is mainly due to debt portfolios serviced from the banking industry.

Trendlines developed among AMCC members: Standardizing operational processes. Improving people performance on the job. Process automation for first level contact. Legal in-house to have a more important role

Market evolution until the end of the year. The respondents expect the market to be highly influenced by new regulations that are pending, as clients that refer debt will also wait on the outcome of these new regulations.The market is expected to stagnate as regulatory uncertainties will temporary affect the current growth.

The respondents also anticipate repayment issues as interest rates will rise do to monetary policy and ROBOR.

1,358,826,229 1,063,385,288

668,209,393 1,248,604,129

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

S1 2017 S1 2018

Value (EUR) of Domestic Debts Referred B2C vs B2B

S1 2018 vs. S1 2017

B2C B2B

87%

175,271,273 185,722,655

23,263,726 31,077,852

-

100,000,000

200,000,000

300,000,000

S1 2017 S1 2018

Value (EUR) of Domestic Debts Recovered B2C vs B2B

S1 2018 vs S1 2017

B2C B2B

22%

Referred

Recovered

34%

6%

17

Increase of revenues in S1 2018 was due to debt purchase revenue stream

Revenues

Revenue split: Around 82% of the revenues from S1 2018 originated from debt purchase.

Compared to the similar period from S1 2017, revenues coming from purchased debt kept a positive trend in S1 2018 and more than doubled since S1 2016.

-

10,000,000

20,000,000

30,000,000

40,000,000

S1 2016 S1 2017 S1 2018

Revenues (EUR) Evolution S1 2016 – S1 2018

B2C Debt collection B2B Debt collection Debt purchased

78%

11%

11%

82%

10%

8%

S1 2017/ S1 2018

Revenues (EUR)Dynamics

S1 2017 S1 2018

B2C Collection 3,706,139 3,051,231 -17.7%

B2B Collection 3,784,978 3,657,203 -3.4%

Debt purchased 27,376,434 29,565,999 8.0%

Total 34,867,550 36,274,433 4.0%

Volume. The reported revenues for S1 2018 reached ~36 mil EUR, an increase of 4% when compared to S1 2017.

60%

8%

31%

60%

6%

34%

19

Agenda









20

Romanian B2C market has registered an increase (10%) for serviced debt, mainly due to higher debt value referred by clients

Serviced debtNumber of cases Value in EUR

Avg. Value in EUR/Case

S1 2017 S1 2018 S1 2017 S1 2018 S1 2017 S1 2018

Debt Referred 2,128,148 1,761,906 732,541,638 803,779,731 188 456

Debt Recovered 940,839 848,046 62,822,743 73,961,708 67 87

B2C by category split. In terms of number of cases, serviced debtreferred represents in the first semester of 2018 roughly 91% of theRomanian B2C debt collection market. While serviced debt recoveredaccounts for 56% in S1 2018 of the total cases of Romanian B2C debtrecovered.

B2C market dynamics. The B2C serviced debt referred in S1 2018decreased by 17% in terms of value managed, mainly due to clientportfolio optimization measures performed by collections agencies andlower value per case of portfolios referred by clients.

B2C market volume. The total value of serviced debt recovered reached~74 mil EUR in S1 2018, while the average value per case was 87EUR/case.

Romanian B2C debt collection market – Serviced debt

188

300

188

456

102

98

157

67 87

315

-

100

200

300

400

500

S1 2015 S1 2016 S1 2017 S1 2018

Debt serviced referred and recovered - Average value

(EUR)/case

Debts referred 4y Recovered Average

Debts recovered 4y Referred Average

102

315

21

Serviced debt

Debt Referred Debt Recovered

S1 2017 S1 2018 S1 2017 S1 2018Sectors

Banks 295,686 241,981 313,131 227,217

Telecom 1,519,208 1,219,525 520,445 410,470

Leasing 94 111 65 77

NBFI 129,454 144,809 49,900 107,390

Insurance 265 180 911 496

Utilities 94,614 102,730 49,521 77,286

Other* 88,827 43,816 6,866 18,761

Total 2,128,148 1,761,906 940,839 848,046

Romanian B2C debt collection market – Serviced debt


S1 2017(‘000)

S1 2018 (‘000)

S1 2017 (‘000)

S1 2018 (‘000)

251,268 542,901 35,395 31,266

138,966 137,383 16,992 14,465

107 137 49 45

32,136 69,997 3,748 15,991

173 84 133 57

10,634 6,483 6,003 3,814

23,639 44,795 500 6,843

456,924 803,779 62,822 73,961

Number of cases Values (EUR)

Guaranteed/Non-Guaranteed debt. Guaranteed serviced debt referred in s1 2018 has reached ~51% out of the totalRomanian banking debt referred in terms of value, while guaranteed recovered debt accounts for ~11% of the total value ofrecovered Romanian banking debt.

Sector split. The most active sector in terms of number of cases referred remains the telecom sector with 69% of the totalnumber of cases B2C debt serviced referred. In terms of recovered serviced debt, the sectors with the highest number of casessuccessfully finalized in S1 2018 are Telecom and Banking with ~48% and respectively ~27%.


Telecom and banking serviced debt represent together 83% of the total B2C service debt referred cases in s1 2018

Debt Referred

Debt Recovered

S1 2017

S1 2018

S1 2017

S1 2018

850 2,244 113 138

91 113 33 35

1,141 1,234 758 587

248 483 75 149

654 471 147 115

112 63 121 49

266 1,022 73 365

215 456 67 87

*other sector: FMCG, education, distribution, etc.

22

Agenda









23

The value of purchased debt recovered has registered a constant value of ~112 mil EUR in S1 2018, compared to S1 2017

Purchased debtNumber of cases Value in EUR


S1 2017 S1 2018 S1 2017 S1 2018 S1 2017 S1 2018

Debt Referred 684,763 170,916 455,773,181 259,605,558 666 1,519

Debt Recovered 703,095 668,990 112,448,530 111,760,948 160 167

B2C by category split. In S1 2018, purchased debt referred accountedfor ~9% of the total Romanian B2C debt referred (serviced and purchased)in terms of number of cases. While debt recovered maintained its share of~44% out of the total number of cases of B2C debt recovered (serviced andpurchased).

B2C market dynamics. In S1 2018, the number of cases of purchaseddebt referred decreased significantly by ~75%, compared to S1 2017.Mainly due to lower number of portfolios available in the market.

B2C market volume. The value of purchased debt recovered remainedrelatively constant ~112 mil EUR in S1 2018 compared to S1 2017, whilethe average value per case was 167 EUR/case.

Romanian B2C debt collection market – Purchased Debt

2,208

1,360

1,242

1,519

1,259

98

157

67 87

147

50

150

250

350

450

550

-

500

1,000

1,500

2,000

S1 2015 S1 2016 S1 2017 S1 2018

Debt purchased referred and recovered - Average value

(EUR)/case

Debts referred 4y Referred Average

Debts recovered 4y Recovered Average

1,259

147

24

Purchased debt


S1 2017 S1 2018 S1 2017 S1 2018Sectors

Banks 69,268 20,893 545,239 525,945

Telecom 323,773 109,545 81,529 91,773

Leasing 11 - - 2

NBFI 280,332 40,478 44,980 25,815

Insurance - - 20,624 25,125

Utilities 10,030 - 10,030

Other* 1,349 - 693 330

Total 684,763 170,916 703,095 668,990

Romanian B2C debt collection market – Purchased Debt


S1 2017(‘000)

S1 2018 (‘000)

S1 2017 (‘000)

S1 2018 (‘000)

271,450 176,315 97,130 98,521

85,386 16,445 4,724 4,863

40 - - 0.233

95,939 66,844 8,027 4,694

2,464 3,637

2,706 - 45

250 - 57 42

455,773 259,605 112,448 111,760


Guaranteed/Non-Guaranteed debt. Guaranteed consumer debt in S1 2018 was under ~1%out of the total value of banking purchased debt referred. While recovered guaranteedpurchased debt was ~13% of the total value of recovered banking debt acquired, as previouslyacquired portfolios area reaching maturity.

Sector split. In terms of purchased cases recovered, the most active sectors are banking with79% and telecom with 14%, while in terms of value referred, banking (88%) remains the mostimportant sector, while telecom, NBFI and insurance have each ~4% share).


In terms of purchased debt referred, ~94% of the value was acquired from the banking and NBFI sectors

Debt Referred

Debt Recovered

S1 2017

S1 2018

S1 2017

S1 2018

3,919 8,439 178 187

264 150 58 53

3,651 - 117

342 1,651 178 182

119 145

270 - 5 -

186 - 83 130

666 1,519 160 167

*other sector: FMCG, education, distribution, etc.

25

Agenda


Debt collection market evolution and trends in 2017







26

The total value of B2B debt referred in S1 2018 has reached 1,248 mil EUR, due to banking debt portfolios serviced and acquired

Serviced debtNumber of cases Value in EUR


S1 2017 S1 2018 S1 2017 S1 2018 S1 2017 S1 2018

Debt Referred 53,874 31,605 348,187,881 1,246,749,759 6,463 39,448

Debt Recovered 38,811 23,854 21,875,919 13,853,670 564 581

B2B by category split. In S1 2018, in terms of value, serviced debt referred accounted ~99.9% of the total Romanian B2B market.As the number of B2B debt portfolios for sale has decreased significantly, compared to S1 2017, mainly due to the market that lackedbig volumes in S1 2018, while creditors have adjusting to the new regulation imposed recently.

B2B market dynamics. In S1 2018, the total number of purchased cases recovered has increased significantly to reach ~17 milEUR. Whereas, the number of purchased cases recovered has also increased by 98% and reached ~7k cases.


Purchased debtNumber of cases Value in EUR


S1 2017 S1 2018 S1 2017 S1 2018 S1 2017 S1 2018

Debt Referred 9,754 3,270 320,021,512 1,854,370 32,809 567

Debt Recovered 3,718 7,370 1,387,807 17,224,182 373 2,337

27

Romanian B2B debt collection market – Serviced Debt


Guaranteed/Non Guaranteed debt. Guaranteed B2B serviced debt referred in S1 2018 has reached 38% out of the totalbanks B2B serviced debt referred in terms of value.

Sector split. The most active sector in terms of number of B2B serviced debt referred cases is the Telecom sector with 53% ofthe total number of B2B serviced debt referred in S1 2018. In terms of value, B2B banking serviced debt referred in S1 2018registered the highest share (98%) among Romanian B2B debt referred with a value of approx. 1,200 mil EUR


The most important sectors in terms of value for B2B debt serviced referred are Banks, Telecom and Other sectors*

Serviced debt


S1 2017 S1 2018 S1 2017 S1 2018Sectors

Banks 6,824 3,136 12,415 6,628

Telecom 20,626 16,662 12,434 12,095

Leasing 846 2,103 499 1,566

NBFI - 325 - -

Insurance 18 3 14 19

Utilities - - - -

Other* 25,560 9,376 13,449 3,546

Total 53,874 31,605 38,811 23,854


S1 2017(‘000)

S1 2018 (‘000)

S1 2017 (‘000)

S1 2018 (‘000)

325,148 1,226,444 12,270 8,456

5,225 8,961 1,514 2,487

965 2,603 446 951

- 887 - -

113 3 43 43

- - - -

16,734 7,850 7,601 1,915

348,187 1,246,749 21,875 13,853

Debt ReferredDebt

Recovered

S1 2017

S1 2018S1

2017S1

2018

47,648 391,086 988 1,276

253 538 122 206

1,141 1,238 894 608

- - - -

6,310 1,030 3,108 2,266

- - - -

655 837 565 540

6,463 39,448 564 581

*other sector: FMCG, services, etc.

28

Romanian B2B debt collection market – Purchased Debt


Guaranteed/Non-Guaranteed debt. 43% of the total banking B2B debt recovered in S1 2018 was guaranteed.

Sector split. The Banking sector has accounted for a large share, in terms of value, (~98%) of the B2B purchased debt recoveredin S1 2018, registering an average value of 19 kEUR / case.


The only B2B debt acquired in S1 2018 was a telecom portfolio with a total value of 1.8 mil EUR

Purchased debt


S1 2017 S1 2018 S1 2017 S1 2018Sectors

Banks 4,204 450 884

Telecom 5,461 3,270 3,267 6,496

Leasing 81 3

NBFI 8 - 1 -

Insurance - - - -

Utilities - - - -

Other* - - - -

Total 9,754 3,270 3,718 7,370


S1 2017(‘000)

S1 2018 (‘000)

S1 2017 (‘000)

S1 2018 (‘000)

302,166 1,057 16,801

8,658 1,854 328 421

1,503 1

7,693 - 1 -

- - - -

- - - -

- - - -

320,021 1,854 1,387 17,224

Debt ReferredDebt

Recovered

S1 2017 S1 2018S1

2017S1 2018

71,876 2,350 19,006

1,585 567 101 65

18,559 509

961,728 1,500 -

- - - -

- - - -

- - - -

32,809 567 373 2,337

29

Agenda









30

International debt recovered by local players have increased in terms of number of cases over the past 4 years

International debt referred

Number of cases Value in EUR Avg. Value in

EUR/Case

S1 2017 S1 2018 S1 2017 S1 2018 S1 2017 S1 2018

B2C 563,097 608,799 1,174,929,421 958,126,845 2,087 1,574

B2B 20,505 25,923 31,755,650 33,420,228 1,549 1,289

B2C by category split. In S1 2018, international B2Cdebt referred accounted for 96% of the total internationalmarket in terms of cases.

Market dynamics. As the number of international debtreferred B2C & B2B cases has decreased in S1 2018 by34%, compared to S1 2017, the average value per casereferred has decreased in S1 2018 compared to S1 2017with ~500 EUR.

Collection market for international clients – Debts referred & recovered

249,656 207,203

309,037 285,952

-17%

+49% -7%

-50%

0%

50%

100%

-

200,000

400,000

S1 2015 S1 2016 S1 2017 S1 2018

International debt – B2C & B2B total number of cases referred and evolution

No. of cases Dynamics

International debt recovered

Number of cases Value in EUR Avg. Value in

EUR/Case

S1 2017 S1 2018 S1 2017 S1 2018 S1 2017 S1 2018

B2C 297,581 274,003 630,422,848 508,695,837 2,118 1,857

B2B 11,456 11,949 17,052,337 14,040,023 1,489 1,175

31

International debt


B2C B2B B2C B2BSectors

Banks 329,391 953 144,695 472

Telecom 237,587 12,209 94,569 1,019

Leasing 494 442 327 267

NBFI 1,037 27 589 13

Insurance - - - -

Utilities 39,500 11,088 33,788 9,709

Other 790 1,204 35 469

Total 608,799 25,923 274,003 11,949

Collection market for international clients – Debts referred & recovered


B2C (‘000)

B2B(‘000)

B2C(‘000)

B2B(‘000)

885,780 462 489,537 210

55,971 11,492 8,246 260

7,252 5,933 4,498 3,680

358 74 110 10

- - - -

7,911 9,487 6,260 8,273

852 5,970 42 1,604

958,126 33,420 508,695 14,040


Guaranteed/Non-Guaranteed debt. No guaranteed consumer debt was referred or recovered in S1 2018. Sector split. As 96% of the international debt referred represents B2C cases, banks (54%), telecom (39%) and utilities (6%)

account for 99.9% of the total B2C number of cases referred in 2017.


The most important sectors in terms of number of international debt referred cases are banks and telecom

Debt Referred

Debt Recovered

B2C B2B B2C B2B

2,689 485 3,383 447

236 941 87 256

14,680 13,424 13,756 13,784

345 2,750 188 799

- - - -

200 856 185 852

1,079 4,959 1,206 3,422

1,574 1,289 1,857 1,175

32

Agenda







Collection market for international clients


33

In S1 2018, respondents have marked automation of activities as one of the most important success factors

Key Success Factors and Process maturity

8%

0%

15%

8%

8%

15%

8%

23%

46%

69%

46%

54%

0%

7%

14%

14%

14%

14%

21%

21%

29%

50%

57%

57%

0% 20% 40% 60% 80% 100%

Documentation of procedures

Regulatory incentives for debt collection

Employee bonus schemes

Sales networks/Regional coverage

B2B networking

Support activities efficiency

Economic environment

Early start of the collection process

Administrative employee experience and performance

Maturity of collection processes

Product portfolio mix

Automation of activities (IT integration)

Key Success Factors

S1 2018 S1 2017

Key Success Factors. The most important KSFs in S1 2018 according to AMCC members has become automation of activities (IT integration) product portfolio mix, followed by maturity of collection processes and administrative employee experience and performance.

The most selected key success factor was automation of activities (IT integration) selected by 8 respondents. As each member is constantly striving to obtain the most efficient process.

IT integration increased lately in importance for debt collectors as constantly IT solutions are improved in order to support the regulatory and business environment.

34

Business improvement is mostly focused on employee performance and preparing for future developments

S1 2018 business improvement initiatives

21%

21%

21%

21%

36%

43%

50%

64%

7%

14%

21%

29%

29%

50%

64%

79%

0% 20% 40% 60% 80% 100%

Improving the product quality

Increase in competitiveness / reducing the pressure coming from the competition

Improving the internal / risk management control level (other than legally imposed)

Cost cutting

Client-focus initiatives (e.g. quality of services)

Improved monitoring of company activity (measuring performance at a process level …

Preparing the company for future development / strategy (organization, …

Employee performance (e.g. training)

S1 2018 vs S1 2017Objectives of business improvement

initiatives for B2C Collection

S1 2018 S1 2017

25%

25%

25%

42%

50%

33%

25%

75%

23%

23%

23%

23%

38%

46%

54%

69%

0% 20% 40% 60% 80% 100%

Increase in competitiveness / reducing thepressure coming from the competition

Cost cutting

Improving the internal / risk managementcontrol level (other than legally imposed)

Improving the product quality

Client-focus initiatives (e.g. quality ofservices)

Improved monitoring of company activity(measuring performance at a process level…

Preparing the company for futuredevelopment / strategy (organization,…

Employee performance (e.g. training)

S1 2018 vs S1 2017Objectives of business improvement

initiatives for B2B Collection

S1 2018 S1 2017

B2C business improvement. In S1 2018 the focus remained on employee performance (79%), with companies investing in trainings (internal & outsourced) for employee development, negotiation skills and on-the-job learning. In order to adapt to market requirements, debt collectors in S1 2018 have launched several business improvement initiatives to prepare the company for future developments.

B2B business improvement. The main business initiative mentioned by the respondents is employee performance which is used to increase the quality of services. Preparing the company for future development/ strategy is seen as an important improvement also for the B2B sector as well.

35

The most utilized segmentation criteria are end-use market and segmentation by client (used by over 75% of members)

Market segmentation criteria

Client segment

Product

End-use market

Segmentation criteria. Most utilized criteria is the client segment (over 90% of players are using this criteria in managing their client portfolio), while the second is end-use market (over 75%).

Product based segmentation and risk level have emerged as an important criteria for market segmentation purpose, selected for over 79% and 71% of the respondents.

All players are using at least one segmentation criteria.

Generally, the regional factor was not selected by many members, as currently it is not perceived as a significant benefit booster.

23%

62%

69%

85%

77%

21%

71%

79%

79%

93%

0% 20% 40% 60% 80% 100%

Region

Risk level

Product

End-use market

Client segment

Segmented approach to market by criteria

S1 2018 S1 2017

Number of criteria used

One criteria 7%

Two criteria 14%

Three criteria 29%

More than three criteria 50%

36

Most frequent KPIs are set together with the client and main focus remains on the level of collected cash

KPI methodology & IT areas covered

8%

23%31%

31%

31%

31%

77%

62%

85%

7% 21%

29%

36%

36%

43%

79%

86%

86%

0% 20% 40% 60% 80% 100%

Other recovery rates

Administrative efficiency

Write-offs

Cash collected/active employee hour

Collected cash, total/client

Delinquency rate

Collected cash, total

Collected cash, % of debt referred/client

Collected cash, % of debt referred

Major KPIs utilized in the B2C Collection process

S1 2018 S1 2017

8%

17%

33%

33%

33%

33%

58%

83%

92%

15%

23%

31%

38%

38%

46%

69%

77%

85%

0% 20% 40% 60% 80% 100%

Other recovery rates

Administrative efficiency

Write-offs

Cash collected/active employee hour

Delinquency rate

Collected cash, total/client

Collected cash, % of debt referred/client

Collected cash, total

Collected cash, % of debt referred

Major KPIs utilized in the B2B Collection process

S1 2018 S1 2017

54%

69%

85%

85%

85%

92%

50%

64%

79%

79%

86%

86%

100%

0% 20% 40% 60% 80% 100%

Risk/Recovery scoring

Controlling

Document management (e.g. full client files)

Management reporting

Process Management steps

Audit logs for client contacting (e.g. call center)

Available details from the customer (contact,…

Areas covered by internal IT support or subject to automation

S1 2018 S1 2017

B2C KPI. In S1 2018 collected cash is still king in terms of utilized KPIs, as the average number of KPI used by a member is 4.

B2B KPI. Similar to B2C, collected cash is the most utilized KPI, with 85% collected cash, % of debt referred being the most frequent. The average number of KPI used by a member increased to 4 KPI/member.

IT support and automation. Most members have already in progress various initiatives for process automation and/or software updating. The main objective would be as stated by them to automate the customer information process

37

Thank You!

38

AMCC - Asociaţia de Management al Creanţelor Comerciale

Website: www.amcc.roE-mail: [email protected]; [email protected] & Communication: Ana Donea, 0722 214 920

Studiu de piata comisionat catre Ensight Management ConsultingWebsite: www.ensight.roE-mail: [email protected] Manager: Flavia Matei, 0743 856736

http://www.amcc.ro/

mailto:[email protected]


http://www.ensight.ro/


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