IPF maintains momentum as profits up, bad debts fall

The Leeds-based group, which lends money to households in countries including Poland, the Czech Republic, Hungary and Mexico, said pre-tax profits in the first three months of the year hit £8.3m compared with £2m a year earlier.

That was after absorbing £5.8m from higher funding costs and early settlement rebates.

Shares in the company lifted 5.61p to 340.61p.

Chief executive John Harnett said: “The growth momentum achieved in the final quarter of 2010 has been maintained in the first quarter of 2011.

“This growth, coupled with much lower impairment, has delivered a substantial improvement in first quarter profit. The group has made a good start to 2011 and is well placed to deliver stronger growth across the rest of the year.”

The group’s bad debt rate fell to 26.6 per cent of revenues from 27.6 per cent at the end of December, with particular progress on impairments made in Poland. It said this was thanks to good credit collection and management in all markets, plus the absence of severe weather in Poland.

“In the final months of 2010 we successfully transitioned the business from a strong focus on credit quality to growth, reflecting the improvements in the economies of the markets in which we operate,” it said.

Customer numbers increased by six per cent to 2.23 million. Revenues were up six per cent, receivables lifted eight per cent and it issued nine per cent more credit at £189.7m.

IPF said it eased credit controls “selectively” in April to speed up growth. It also plans to recruit extra agents and expand its branch networks in Mexico and Romania.

IPF said borrowing costs have increased after the group restructured its debt facilities, with finance costs increasing by £3.3m despite borrowings falling by £38m to £292m.

IPF typically delivers its weakest profits in its first quarter as customers’ incomes are at their lowest.

IPF was formed in 1997 as a division of Bradford-based Provident Financial, the UK’s leading provider of home credit.

The group, which was the former international division, split from Provident Financial in July 2007.

It established its first operations in Poland and the Czech Republic and later moved into Slovakia, Hungary, Romania and Mex- ico.

Customers typically borrow money to pay for Christmas presents, summer holidays and back-to-school necessities.

The money is collected in weekly payments by doorstep debt agents.

IPF holds its annual shareholder meeting on May 11.