Arrow Global Group (>> Arrow Global Ltd) reported higher revenue for the first nine months of 2017 as it bought more non-performing loans (NPL) and non-core assets from banks in Europe, driven by the continued reform in the region's banking sector.
The debt purchaser and manager, which buys defaulted customer accounts from retail banks and credit card companies, said revenue rose to 231.6 million pounds in the nine months ended September, from 164.3 million pounds a year earlier.
The company's pretax profit rose to 20.1 million pounds in the period, from 14.2 million pounds a year earlier, driven also by a jump in core collections and revenue from asset management.
Arrow Global, which services portfolios in Britain, Portugal, Holland, Belgium, France and most recently entered Italy, said core collections rose 13 percent to 244.1 million pounds in the nine-month period.
The debt collector said organic purchases of loan portfolios rose 30 percent to 155 million pounds in the period.
Regulatory pressure on Europe's banks to offload the almost 1 trillion euros of non-performing loans on their books has benefited Arrow Global and other collection companies such as Intrum <IJ.ST> and Hoist Finance (>> Hoist Finance AB (publ)).
Arrow Global said the outlook for NPLs across its markets remained "attractive", supported by the European Central Bank's recent guidance on accelerated provisioning.
The ECB plans to ask Euro area banks to set aside more cash to cover bad loans, making it prohibitively expensive for lenders to keep sitting on them, a draft proposal seen by Reuters showed last month.
Deloitte, one of the world's top four accounting firms, said in a report that the European loan portfolio market had a slow start in the first half of 2017 as sellers and investors pushed deals into the second half of the year.
However, with a large number of ongoing deals still in the pipeline for the second half, the total market for 2017 is set to exceed the record deal making of the previous two years when over 100 billion euros (88.25 billion pounds) of deals were concluded, Deloitte added.
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Gopakumar Warrier and Amrutha Gayathri)