IPF reports growth as Mexico recovers

Credit lender International Personal Finance reported strong growth in the amount of credit it has issued and said it expects further growth over the fourth quarter.
IPF's CEO Gerard Ryan said Poland-Lithuania returned to modest growth after contracting in the first halfIPF's CEO Gerard Ryan said Poland-Lithuania returned to modest growth after contracting in the first half
IPF's CEO Gerard Ryan said Poland-Lithuania returned to modest growth after contracting in the first half

The Leeds-based firm said the 9 per cent rise in credit issued was driven by a return to growth in Mexico, good trading in Southern Europe and a strong performance in IPF Digital.CEO Gerard Ryan said'‹ Poland-Lithuania returned to modest growth after contracting in the first half although market conditions in the Czech Republic remain particularly challenging. "Customer numbers increased year-on-year by one per cent and our collections performance is good overall with impairment as a percentage of revenue at 26.1 per cent being at the lower end of our target range of 25 to 30 per cent," he said.'‹The group's '‹home credit'‹ business'‹ delivered a 5'‹ per cent'‹ increase in credit issued'‹ over the three months to September 30,'‹ but challenging trading'‹ '‹conditions, particularly in some of '‹its'‹ European markets, '‹hit rates of customer growth'‹ '‹which '‹fell 1 per cent year-on-year to 2,468,000.'‹The group has'‹ taken a number of actions'‹ '‹to improve the performance of '‹its'‹ business in Mexico. These, together with expansion implemented in the first half of 2016, resulted in'‹ '‹a year-on-year increase in credit issued of 10'‹ per cent'‹ and growth in customer numbers of 4'‹ per cent'‹ to'‹ '‹874,000. '‹Mr Ryan said annualised impairment is at a similar level to June 2016 and is likely to remain at'‹ '‹an elevated level for the remainder of the year. '‹"'‹We expect to deliver continued satisfactory'‹ '‹growth in '‹the fourth quarter'‹ as we balance growth with maintaining credit quality'‹," he said.'‹'‹The group's '‹'‹Poland-Lithuania business '‹is focused on mitigating the financial impact of the'‹ '‹cost of credit legislation which was introduced in Poland in March 2016. '‹It said that c'‹ompetition'‹ '‹remains intense with '‹"'‹first loan for free'‹"'‹ '‹deals '‹still being offered by most short-term lenders and an'‹ '‹ongoing trend towards longer term installment lending. Credit issued growth '‹in '‹'‹Poland-Lithuania'‹ '‹was 1'‹ per cent'‹, an'‹ '‹improvement on the contraction of 4'‹ per cent'‹ reported in '‹the first half and customer numbers'‹ fell 7 per cent'‹ year-on-yea'‹r.'‹"'‹We continued our strategy of selectively offering longer'‹-'‹term and larger loans to qualifying customers'‹," said Mr Ryan'‹. '‹"'‹Customer response to the new regulations'‹ '‹was broadly in line with our expectations and we continue to believe that we can mitigate up'‹ '‹to half of the estimated £30'‹m a year'‹ gross financial impact resulting from this legislative'‹ '‹change.'‹"'‹Analyst Gary Greenwood at Shore Capital said: "International Personal Finance'‹'s third quarter trading update shows improved growth in credit issuance, following a disappointing '‹first half'‹ performance, with growth in customer numbers broadly unchanged. '‹"'‹Overall credit issuance increased by 9'‹ per cent'‹ at constant exchange rates with customer growth of 1'‹ per cent, implying an increase in credit issuance per customer as the group focused more on larger, longer-term loans'‹."Analysts at Liberum said in a note: "This is a more encouraging update with the '‹d'‹igital business showing strong progress and a return to growth in Mexico, albeit bad debt at elevated levels. '‹It is l'‹ikely to be viewed as in-line and '‹the '‹stock could therefore go better.'‹"'‹IPF'‹ said its digital '‹business '‹delivered strong growth in the third quarter and credit'‹ '‹issued '‹rose '‹by 44'‹ per cent. Digital grew active customer numbers by 45'‹ per cent'‹ to 171,000. '‹"'‹Our new digital'‹ '‹markets of Poland, Australia and Spain are performing very well and reported an'‹ '‹acceleration in credit issued growth. We also commenced operations in Mexico - this'‹ '‹country has great potential but we will manage our growth conservatively as we build'‹ '‹knowledge of the local digital market.," said Mr Ryan.