Interview: Tim Boon, Director: Total Lifestyle Credit
After noticing a gap in the medical finance sector, Mr Boon’s credit service has gone from strength to strength.
After noticing a gap in the medical finance sector, Mr Boon’s credit service has gone from strength to strength.
What are Total Lifestyle Credit’s (TLC) goals for the consumer?
TLC’s goal for the consumer is to provide a quick and easy financial platform that allows them to break their upfront payment into smaller more manageable payments over a longer period.
This allows them to have their product or service now, rather than having to wait months or years by giving them an array of options and opportunities to choose a payment plan that suits their specific needs and personal goals.
Having a broader funding option also gives TLC a greater opportunity for the client to get the right approval result.
What makes it different from other finance providers?
With a range of underwriters, we are able to provide the best financial product for the client based on their personal situation. This is alongside real people who listen and talk to the client through the process at each step of the way. Making their otherwise uncomfortable transaction very comfortable and hassle-free.
Additionally, TLC has over 1800 professional partners on board, this gives clients the opportunity to get that extra reassurance and expert opinion before they make what can be seen as a life-altering decision.
A big invoice can be daunting for clients and can often be a deal-breaker. When funding is easily accessible and affordable it is a “win-win” for both business and client.
How did you build the business in its early years?
I am hugely passionate about the medical sector and noticed a lack of funding options available to the public, in 2004 I started MacCredit a patient funding platform and grew it to the largest medical loan business in Australia, successfully selling to a Private Equity firm in 2016.
It definitely was a very hard sell to the medical and cosmetic sector, however after 24 months a lot of businesses saw the service and integrity I was delivering. I started Total Lifestyle Credit (TLC) in 2019 my new consumer lending platform that commenced in 2019.
What’s the reasoning for the pillars of medical, dental, lifestyle and wedding?
At TLC we hold the utmost importance at looking after our clients in relation to their specific needs. For example a client who is looking at a financial payment plan for a wedding will have a very different needs compared to an individual who is seeking finance for a medical procedure that their child needs. This allows us to personalise our interactions with the client based on the service they seek. TLC aspires to help every individual that we can, if there is a client that is in need of funds for a dental procedure and their friend needs funds for a holiday, we are happy to say that we can help both of those individuals, with the same level of service and enthusiasm.
Roughly what percentage of the business does each pillar represent?
Medical – 60%
Broker – 10%
Lifestyle – 20%
Wedding – 10%
You’ve alluded to the fact that TLC goes beyond cosmetic procedures including IVF programs, eye surgery and more — you note a shift away from private health insurance. Why?
The reason individuals are shifting away from private health insurance is that they do not see the value in it anymore. Young individuals are less likely to choose to continue their private health insurance after their family coverage no longer applies to them. TLC offers the opportunity to receive funds almost instantly, rather than having to wait until the benefits of private health insurance kick in. We fund all treatment costs for all medical/cosmetic fees and with little to no early payout fees so the patient can control their repayment timeline.
Australian citizens are spending about $1 billion on cosmetic procedures every year — per capita, around 40% more than Americans do – why do you think it’s so high in Australia?
There is less of a stigma in Australia when it comes to having cosmetic procedures. Social media marketing in reference to cosmetic procedures are increasingly common, creating an inviting space for individuals to be able to seek professional advice on their personalised goal.
How has the market been affected by COVID (if at all)?
Covid has affected the industry quite significantly. Clients have had to opt to have their procedures within Australia instead of the choice of overseas treatment. It has also provided the time and space for patients to focus on themselves. This has increased the demand for TLC during Covid and people are able to have their procedures with minimum downtime from work.
What do you think the future of cosmetic procedures going forward?
TLC is excited to see the growth of the cosmetic world as we see great potential. Already in the past years, TLC has been operating we have seen a reduction of Brazilian butt lift procedures coming through and an influx of breast augmentation. Cosmetic procedures are evidently becoming more popular and desirable to individuals, with an array of talented surgeons coming on board. This ensures us to believe that the cosmetic industry only has one way to go and that’s up!
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Shares in European banks such as UniCredit have been on a tear
After years in the doldrums, European banks have cleaned up their balance sheets, cut costs and started earning more on loans.
The result: Stock prices have surged and lenders are preparing to hand back some $130 billion to shareholders this year. Even dealmaking within the sector, long a taboo topic, is back, with BBVA of Spain resurrecting an approach for smaller rival Sabadell .
The resurgence is enriching a small group of hedge funds and others who started building contrarian bets on European lenders when they were out of favour. Beneficiaries include hedge-fund firms such as Basswood Capital Management and so-called value investors such as Pzena Investment Management and Smead Capital Management.
It is also bringing in new investors, enticed by still-depressed share prices and promising payouts.
“There’s still a lot of juice left to squeeze,” said Bennett Lindenbaum, co-founder of Basswood, a hedge-fund firm based in New York that focuses on the financial sector.
Basswood began accumulating positions around 2018. European banks were plagued by issues including political turmoil in Italy and money-laundering scandals . Meanwhile, negative interest rates had hammered profits.
Still, Basswood’s team figured valuations were cheap, lenders had shored up capital and interest rates wouldn’t stay negative forever. The firm set up a European office and scooped up stock in banks such as Deutsche Bank , UniCredit and BNP Paribas .
Fast forward to 2024, and European banking stocks are largely beating big U.S. banks this year. Shares in many, such as Germany’s largest lender Deutsche Bank , have hit multiyear highs .
A long-only version of Basswood’s European banks and financials strategy—which doesn’t bet on stocks falling—has returned approximately 18% on an annualised basis since it was launched in 2021, before fees and expenses, Lindenbaum said.
The industry’s turnaround reflects years spent cutting costs and jettisoning bad loans, plus tougher operating rules that lifted capital levels. That meant banks were primed to profit when benchmark interest rates turned positive in 2022.
On a key measure of profitability, return on equity, the continent’s 20 largest banks overtook U.S. counterparts last year for the first time in more than a decade, Deutsche Bank analysts say.
Reflecting their improved health, European banks could spend almost as much as 120 billion euros, or nearly $130 billion, on dividends and share buybacks this year, according to Bank of America analysts.
If bank mergers pick up, that could mean takeover offers at big premiums for investors in smaller lenders. European banks were so weak for so long, dealmaking stalled. Acquisitive larger banks like BBVA could reap the rewards of greater scale and cost efficiencies, assuming they don’t overpay.
“European banks, in general, are cheaper, better capitalised, more profitable and more shareholder friendly than they have been in many years. It’s not surprising there’s a lot of new investor interest in identifying the winners in the sector,” said Gustav Moss, a partner at the activist investor Cevian Capital, which has backed institutions including UBS .
As central banks move to cut interest rates, bumper profits could recede, but policy rates aren’t likely to return to the negative levels banks endured for almost a decade. Stock prices remain modest too, with most far below the book value of their assets.
Among the biggest winners are investors in UniCredit . Shares in the Italian lender have more than quadrupled since Andrea Orcel became chief executive in 2021, reaching their highest levels in more than a decade.
Under the former UBS banker, UniCredit has boosted earnings and started handing large sums back to shareholders , after convincing the European Central Bank the business was strong enough to make large payouts.
Orcel said European banks are increasingly attracting investors like hedge funds with a long-term view, and with more varied portfolios, like pension funds.
He said that investor-relations staff initially advised him that visiting U.S. investors was important to build relationships—but wasn’t likely to bear fruit, given how they viewed European banks. “Now Americans ask you for meetings,” Orcel said.
UniCredit is the second-largest position in Phoenix-based Smead Capital’s $126 million international value fund. It started investing in August 2022, when UniCredit shares traded around €10. They now trade at about €35.
Cole Smead , the firm’s chief executive, said the stock has further to run, partly because UniCredit can now consider buying rivals on the cheap.
Sentiment has shifted so much that for some investors, who figure the biggest profits are to be made betting against the consensus, it might even be time to pull back. A recent Bank of America survey found regional investors had warmed to European banks, with 52% of respondents judging the sector attractive.
And while bets on banks are now paying off, trying to bottom-fish in European banking stocks has burned plenty of investors over the past decade. Investments have tied up money that could have made far greater returns elsewhere.
Deutsche Bank, for instance, underwent years of scandals and big losses before stabilising under Chief Executive Christian Sewing . Rewarding shareholders, he said, is now the bank’s priority.
U.S. private-equity firm Cerberus Capital Management built stakes in Deutsche Bank and domestic rival Commerzbank in 2017, only to sell a chunk when shares were down in 2022. The investor struggled to make changes at Commerzbank.
A Cerberus spokesman said it remains “bullish and committed to the sector,” with bank investments in Poland and France. It retains shares in both Deutsche and Commerzbank, and is an investor in another German lender, the unlisted Hamburg Commercial Bank.
Similarly, Capital Group also invested in both Deutsche Bank and Commerzbank, only to sell roughly 5% stakes in both banks in 2022—at far below where they now trade. Last month, Capital Group disclosed buying shares again in Deutsche Bank, lifting its holding above 3%. A spokeswoman declined to comment.
U.S.-based Pzena, which manages some $64 billion in assets, has backed banks such as UBS and U.K.-listed HSBC , NatWest and Barclays .
Pzena reckoned balance sheets, capital positions and profitability would all eventually improve, either through higher interest rates or as business models shifted. Still, some changes took longer than expected. “I don’t think anyone would have thought the ECB would keep rates negative for eight or nine years,” said portfolio manager Miklos Vasarhelyi.
Some Pzena investments date as far back as 2009 and 2010, Vasarhelyi said. “We’ve been waiting for this to turn for a long time.”
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