DCA reported record collections in 2019 and maintained its leading market positions

Debt Collection Agency EAD (DCA), a leading debt purchaser in Bulgaria and part of Norway-based B2Holding, improved significantly its efficiency in 2019 and achieved the highest rate of collection in its 10 year history, according to the audited individual financial statement of the company.

Last year DCA collected over BGN 62 million from its purchased portfolios – an absolute record, which was 51% up than the cash collected in 2018 and a fourfold increase compared to the 2016 figure. It is a key indicator of the company’s productivity.

The assets of DCA exceeded BGN 130 million, an increase of over 10% year-on-year, the financial statement showed. The revenues remained slightly below the level of the previous year – BGN 26.1 million. The company reported an accounting loss of BGN 1.27 million due to one-off write down in the secured portfolio in the middle of the year. The negative final result was compensated in full by the profits accumulated in the previous 6 years – approx. BGN 30 million. Additionally, in 2019 DCA at least succeeded to realize an operating profit of over BGN 4.3 million.

“Certainly, we have higher ambitions in terms of financial results, but last year our main goal was to achieve a higher efficiency and improve the effectiveness in operations. The record rate of cash collection from our purchased portfolios is a proof that we coped with the task. We believe that we are more competitive now and we will continue to be among the market leaders in the sector“, Dimitar Bonchev, CEO of DCA, said.

Digitalisation at full speed

The automation of DCA’s processes and systems, as well as the services provided to clients, is the other key area in which the company invested in 2019. “Technology and digitalisation were our top priority in the last year. They are our priority in 2020 too. Digitalisation is crucial for our business in the context of COVID-19 epidemic, not only in Bulgaria, but also within the whole group“, Dimitar Bonchev added.

During 2019 DCA launched several successful digital projects. The company is the only one in the sector that integrated an online platform enabling its customers to pay their overdue debts remotely and easily with an option for full self-service. During the COVID-19 quarantine the affected clients could also submit an application for rescheduling their repayment installments. It was initiated by DCA and it was the company’s social contribution in the unprecedented crisis.

The company has been implementing numerous new technologies in order to improve customer services and solve complicated cases related to the customer relations. “Technology reduces our costs to collection. Digitalisation also ensured our business and work continuity during the COVID-19 quarantine and helped us shift successfully most of our operations to work from home thus securing the health and safety of our colleagues. We are working on a few more interesting projects, so I think we will again be among the first to introduce such innovations in the sector,” Bonchev said.

Scent of a rise of non-performing loans

An increase in the share of non-performing loans is expected in 2020 and 2021. It is a prerequisite for new business for debt purchasers. Most recently, Andrea Enria, chair of the European Central Bank’s (ECB) supervisory board, told the German business daily Handelsblatt that a prolonged second wave of the coronavirus pandemic could prompt bad loans to rise to €1.4 trillion, so banks should be prepared for such a development.

For now, there are no official indications of any problems. In Bulgaria the sector even reported a decline in non-performing loans in the second quarter of the year, but it is due to the imposed temporary moratorium on loan payments because of the corona crisis. The moratorium expires in March 2021. The picture would be clearer in the first half of next year. “I have been working at the company from the very beginning and for a 10-year period it has been transformed from a small player to a leader in the sector. We shall be among the large, trusted and reliable partners of banks and non-bank financial institutions in terms of sales of non-performing loans (NPLs). NPLs are unanimously expected to grow and according to some predictions their amount will exceed the one generated by the crisis in 2009”, Dimitar Bonchev explained.

As of the end of 2019 DCA has 260 employees equal to a little more than 10% of the total number of employees in the entire B2Holding, that operates in 20 European markets. The Norwegian holding is in the top 10 of the debt purchasers in Europe.