Listed credit lender reports contraction of European market while its Mexico and fintech divisions expand
Leeds credit lender International Personal Finance (IPF) has seen a 2% growth in the credit it has issued during the first half of 2018 but has seen a contraction in the European marketplace.
The listed firm, which provides unsecured consumer credit to customers across 11 markets, has reported group pre-tax profits of £56.5m for the six months to 30 June; up from £49.3m for the same period in 2017. Its turnover increased from £400m to £418m.
IPF issued a total credit of £632m, a 2% growth on the £616m it issued in 2017. But a “challenging market landscape” in its European marketplace drove a contraction of 6%, with the credit it issued in the period dropping to £367m from £378m and customer numbers falling 15%. Despite this, its pre-tax profits in the market rose by £4.4m to £60.8m.
“As expected, competition and regulatory tightening impacted customer numbers and credit issued growth which contracted year-on-year by 15% and 6% respectively. Our move to serve better quality customers allows us to lend slightly larger and longer-term loans and, as a result, average net receivables reduced by only 2% and, together with a modest contraction in revenue yield, revenue reduced by 6%,” said International Personal Finance.
Its Mexico home credit division performed better, with a 3% increase in customer numbers and a 7% growth in credit issued. Pre-tax profits rose to £7.4m from £5.7m. The firm added: “We were pleased to return to customer growth attracting 37,000 more new customers since the 2017 year end compared to no growth last year, when our focus was on repeat lending to existing customers. Against strong comparative numbers, we delivered a 7% increase in credit issued driven by the branches that we have opened since 2016 and our micro-business lending channel.”
It fintech business, IPF Digital, narrowed its losses. The firm stated that its pre-tax losses went from £10.5m in H1 2017 to £3.7m in H1 2018; as its credit issued in the division rose 25% to £135.4m. IPF said: “This result was driven by significantly reduced losses in our new markets where we delivered strong top-line growth, improved impairment and cost-leverage combined with improved profitability in the established markets.”
The firm said it had made good progress extending and diversifying funding, which included issuing a new 4-year Swedish Krona 450m (£38.6m) 2022 bond and £17.6m of new bank funding added including two new banks.
Chief Executive Officer, Gerard Ryan, said: “I am pleased to report that we delivered a good financial performance and made excellent progress against our strategic objectives. Group profit before tax increased by £12.6m to £56.5m reflecting profit growth in our home credit operations and IPF Digital’s established markets together with significantly reduced start-up losses within IPF Digital’s new markets. We also strengthened our funding position and while we expect the regulatory and competitive landscape to remain challenging, we are on track to deliver good returns from our European home credit operations, achieve our medium-term growth strategy in Mexico home credit and IPF Digital, and continue to deliver long-term value for our key stakeholders.”
