Confident IPF set for flourish in festive season

CREDIT lender International Personal Finance is looking forward to strong Christmas trading after reporting a massive jump in third quarter profits.

The Leeds-based group posted a 36 per cent rise in pre-tax profits to 24.4m in the three months to September 30, helped by a strong recovery in Hungary and improving profits in Romania.

The company, which lends small cash sums to consumers in central Europe and Mexico, said economic conditions and consumer confidence are improving, although conditions vary by market.

Hide Ad
Hide Ad

IPF said that at the end of September credit quality and collections performance was good in all markets. The number of customers eligible for the offer of a further loan was 15 per cent higher than last year.

IPF chief executive John Harnett said that this gives the group a good platform for improved growth in the fourth quarter, the seasonal peak period, and for delivering a strong result for the year.

"Christmas is always an important period for us as we lend money for Christmas presents and family costs," he said. "We are focusing the agency force towards growth in the fourth quarter."

Following the trading update the group's shares closed up 1.4 per cent, a rise of 4p to 303.2p.

Revenues rose 10 per cent to 145.6m in the three months.

Hide Ad
Hide Ad

During 2010 the group said it had seen a return to economic growth, an improved economic outlook and improvements in consumer confidence, with the exception of Romania where the position is weaker but stable.

Mr Harnett said IPF has benefited as the countries it operates in have had less exposure to the global recession than the UK.

"Most of the economies we deal with are doing much better than the UK," he said. "For example Poland never went into recession."

Poland, the Czech Republic and Slovakia continued to perform well over the three months with good collections performance and credit quality.

Hide Ad
Hide Ad

The three countries have produced stronger growth in recent weeks. Quarterly profit rose by five per cent to 24.8m.

Hungary continued its strong recovery and made a pre-tax profit of 2.6m in the third quarter after making a loss of 2.0m last year, including 3.0m of restructuring costs.

The key driver was a strong collections performance and the business is also starting to re-build customer numbers.

Mexico reported a quarterly pre-tax profit of 500,000, including 200,000 of losses from the newly opened Monterrey region, which the group said is developing well.

Hide Ad
Hide Ad

Growth in the Puebla and Guadalajara regions has been deliberately slowed down to ensure credit quality was maintained after some early signs of deterioration. As a result, credit quality and impairment levels have remained good and the group expects a stronger performance in the fourth quarter.

In Romania, the economic backdrop was weaker than other markets and IPF implemented a tightening of credit criteria in advance of the government's austerity plan, which took effect in July.

As a result the Romanian business performed well and continued to keep impairment under control and trade profitably, reporting a profit for the quarter of 200,000 compared with a loss of 800,000 last year.

The aim is to deliver a maiden full year profit in Romania in 2010.

Hide Ad
Hide Ad

Mr Harnett said the group hopes to enter a new market next year and will make a decision on whether to push into Ukraine, Bulgaria or India at the end of this year. "The frontrunner is Ukraine," he said. "It's a big market and it's close to our existing operations in Poland."

Mr Harnett said IPF has no plans to pull out of its headquarters in Leeds, despite the fact that all of its business is based abroad. "We have got a pool of very experienced people in Leeds," he said.

A first on polish stock market

International Personal Finance completed its 43m Polish bond issue earlier this month, in line with the group's plans to diversify its sources of funding.

IPF's bonds are now trading on the Polish stock market – the first non-Polish company to list bonds on the Warsaw stock exchange.

Hide Ad
Hide Ad

The proceeds are being used by IPF's Polish operation to develop the business.

IPF finance director David Broadbent said he was "really pleased" with progress on the group's funding over the past three months.

IPF is optimistic it can raise 450m in bond and bank finance by the end of the year to fund its lending.

The group has already issued a 225 million Euro bond.

IPF needed to raise new money before its existing facilities expire in October 2011. Debt market turmoil in the wake of the Greek sovereign debt crisis had previously prevented it from selling bonds.