DLL, a global provider of asset-based financial solutions, reported a net profit for the 2020 business year. In the face of challenging external conditions, the company delivered portfolio and income growth, while net profit was heavily diluted by higher risk costs attributable to the COVID-19 pandemic.
DLL reported net profit of $206 million for FY2020. Despite the difficult economic environment and softening business demand, the company grew its portfolio to $42.9 billion, an increase of 2 percent when excluding currency movements. This strong performance was achieved under challenging market conditions and supported by broad diversification across multiple industry sectors and more than 30 countries.
“This past year was unprecedented, and both our business model and global workforce displayed amazing adaptability and resilience,” said Bill Stephenson, CEO and Chairman of the Executive Board. “It was reassuring to see that our underlying financial performance remained solid and allowed us to maintain our strong presence in the market. I am proud of our efforts to support our customers and help them overcome so much adversity during this crisis year.”
Economic Impact of Pandemic Weighs on Results
Despite the significant impact the pandemic had on credit impairments, the underlying performance of DLL’s portfolio remained strong. The company reported net income of $1,709 million, which represented almost 6 percent growth over the prior year. “We remain comfortable with the overall quality of the portfolio and the long-term outlook on performance,” noted Marc Dierckx, CFO and Member of the Executive Board.
On a year over year basis, impairments almost doubled to $467 million, representing 121 basis points of the average portfolio. “The economic hardships brought on by the pandemic limited the ability of some customers to service their debt,” commented Dierckx. “However, the resilience of our business model, coupled with our strong capitalization, allowed us to successfully navigate through this period of uncertainty and deliver a net profit.”
Of further note, a significant driver of the increased impairments were IFRS-9 Stage 1 and Stage 2 impairments, which are heavily influenced by the macro-economic outlooks in the markets where DLL operates and by key indices such as unemployment. IFRS-9 Stage 1 and Stage 2 impairments were $217 million, which was nearly four times higher than 2019 and represented almost half of total impairments in 2020.
Looking Ahead
“With the start of vaccine distribution in many countries, our focus now shifts to adapting to the ‘new normal’ and the promise of a return to better times,” said Stephenson. “Even as we look ahead with optimism, we will reflect on our experiences of the past year, ensuring that DLL emerges from the pandemic as an even stronger and more agile company for our customers and our global workforce.”
“The strength of our business model and strategy were significantly tested and validated again.” added Stephenson. “And that strength was only surpassed by the energy and engagement of our global workforce, who worked tirelessly to provide much needed support to our customers during these difficult times. With all these essential elements in place, I am confident that DLL will continue forward on a trajectory of growth and success in 2021 and beyond.”