Eurozone crisis could hit growth, warns lender IPF

The Leeds-based group, which lends small sums to households in countries such as Poland, Hungary, Romania and Slovakia, insisted the economies of its target markets are performing strongly, adding it will be quick to adjust to any changes.

Chief executive John Harnett said: “Each of our economies are showing strong growth, increasing unemployment and sound Government finances.

“The economies we’re in are looking pretty good.

“But if there is a significant issue in the eurozone, if it hit France or Germany, particularly Germany, it would hit us. Our markets are significant exporters to Germany, and France has close links to Romania.”

That said, Mr Harnett said he thought it unlikely that the eurozone debt crisis would damage countries as strong as Germany and France.

“Our core assumption is it won’t happen, but we’re sounding a note of caution. We will keep our credit controls tight.”

Asked if he had seen any sign of a downturn yet, he said: “We have seen no sign at all. Our collections performance is good.”

In terms of exposure to the eurozone, Mr Harnett said Hungary is the market with the highest exposure to exports, particularly Germany.

“ ‘Czech/Slovakia’ is also very much German-focused,” added Mr Harnett. “Romania is more exposed to France than Germany.”

Poland, the group’s strongest country, is the least exposed.

“Poland has small exposure to exports, it’s quite an insular economy,” said Mr Harnett.

He added that the group’s latest market Mexico is more complicated.

“Some 40 per cent of Mexico’s exports are to the US, but a lot of that is oil.”

Mr Harnett is hoping for clear results about Greece from tomorrow’s summit on the eurozone debt crisis.

French ministers said yesterday that Europe’s leaders are less divided than believed and are likely to reach an accord that will relieve Greece’s troubles.

French finance minister Francois Baroin said leaders need to send a “strong message” that eases the burden on Greece of high interest rates on its debt and deadlines for repayment. But he firmly opposed any measures that would lead to a Greek default being declared.

IPF said rapid growth in Poland and Romania boosted the group’s profits and it is on course to deliver a good performance for the year as a whole.

The group reported first half pre-tax profits of £35.7m for the six months to June 30, up 17 per cent on last year. Earnings per share rose 14 per cent to 10.13p, while it increased its interim dividend by 19 per cent to 3.00p.