ZAIM Credit Systems PLC (LON:ZAIM) said its subsidiary Zaim Express LLC entered into a loan agreement for an additional 50mln Russian roubles (£0.5mln) with a duration of 1.5 years and an annual interest rate of 15% payable monthly.
The financial technology firm, which focuses on providing finance to consumers not well served by mainstream lenders, said the funds will be used to increase its active loan book by funding its online activities while a smaller portion will be ringfenced for certain potentially high impact business development activities.
READ: Zaim Credit increases online lending by 250% in final quarter of 2020
ZAIM said with interest rates being structurally higher in Russia than in Western Europe, the 15% annual interest rate is considered to be "reasonable" for an unsecured loan portfolio facility and the equivalent monthly rate of around 1.2% for this additional loan agreement “compared favourably” to the current returns generated from its lending activities and is expected to have a “meaningful impact” on its financial performance at a critical time.
The company also said it had ended 2020 with a “strong performance” which has continued into 2021.
"We are pleased to note that our business, especially its online segment is growing beyond our expectations. As such we have found that we have had to restrict supply of loans to new customers - this additional facility will help us finance some of this additional demand and therefore enable us to enhance shareholder returns. We are pleased with the show of support from our existing banking provider, which adds additional validation to our business model", ZAIM chief executive Siro Cicconi said in a statement.
Shares in ZAIM were steady at 3.8p in early deals on Tuesday.