Buoyant IPF sees customer numbers increase

Credit lender International Personal Finance reported a strong third quarter following a six per cent increase in customer numbers.

The Leeds-based group, which operates in Poland, Hungary, the Czech Republic, Slovakia, Romania and Mexico, said credit issued rose by 16 per cent and revenues were up nine per cent to £162m in the three months to September 30.

The group reported “strong progress” in its Mexican operation following a trial in 18 of its 50 branches to offer existing customers more credit.

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Pre-tax profits of £27.2m were in line with the third quarter of 2011 following a £4.1m hit from weaker foreign exchange rates and a £2.5m hit from early settlement rebates.

In the past, people settling their debts early had to pay an administrative penalty, but this has been reduced to a very small charge. This means IPF is earning less revenue than it did historically. By this time next year this negative effect will have worked its way through the comparatives.

New chief executive Gerard Ryan said IPF is expanding its lending criteria.

“Where customers have proved their credit history we can offer them larger loans in future,” said Mr Ryan.

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“We’re seeing a big tick up in Hungary. We’ve decided we should take more risk there. We feel we can take on more.”

The group is now taking on around 50 to 60 per cent of the people who apply for a loan, which is considerably higher than the industry average, but IPF believes it is still taking on low risk customers.

“A better metric of credit quality is our impairment figure which stands at 26.5 per cent which is at the bottom end of our target range of 25 to 30 per cent and compares favourably to some of our sector peers,” said Mr Ryan.

“Our agents critically assess each and every loan based on the fact that the large majority of their income is based on their collections performance. Agents are only interested in lending money to people who can pay it back,” he added.

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Asked about the impact of the eurozone crisis, he said the countries IPF operates in can’t be removed from it.

“They are impacted by what happens in Germany, which is slowing down so there is likely to be a knock-on impact, but we’re not seeing a major impact,” said Mr Ryan.

The group is in the process of restructuring its Leeds head office, which will result in 38 people being made redundant.

“We had 58 vacancies resulting from the restructure, ten roles of which were created overseas,” said Mr Ryan.

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“Of these 58 positions, 21 roles were filled with existing IPF people. In total, 38 people will have been made redundant as a result of the UK restructure which will finish in July,” he added.

On joining the firm, Mr Ryan decided that the head office was carrying out too many roles that would be better suited to the country where the operation is. When the restructure finishes the group will have 150 employees at its head office.

IPF is looking at opening operations in neighbouring countries to where it has existing operations. Mr Ryan refused to be drawn on where these might be, but obvious candidates include Bulgaria, Slovenia and Serbia to the south and Ukraine, Belarus and Lithuania to the north east.

The group said the £25m share buyback programme announced in the half year financial report is progressing well. It has bought around five million shares at a cost of around £15m.