IPF shares knocked by Hungary proposal to lower the rate cap

In a speech to the Hungarian parliament, prime minister Orban suggested that his government may propose legislation to limit the APR on consumer loans to no more than 30 per cent.

Leeds-based IPF said it is seeking clarification of the intentions of the Hungarian government.

“At this stage, it is not possible to estimate the impact, if any, enactment of this proposal might have on IPF’s Hungarian business,” the group said in a statement.

IPF’s Hungarian business reported pre-tax profits of £9.1m in 2010. Its loans have a typical APR of 65 per cent.

“We will continue to review the position and a further announcement will be made as appropriate,” said IPF.

The group’s shares closed down 12p at 223p last night.

IPF recently warned that its growth could be hit by the eurozone debt crisis, as problems in more established economies threaten to spill over into neighbouring countries.

The 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.”