Lender celebrates happy Christmas as growth continues

Shares in the Leeds-based company rose 2.7 per cent last night, a rise of 9.3p to 352.2p following the upbeat statement.

IPF chief executive John Harnett said the company was in good shape going into the Christmas season and into next year.

The emerging markets lender said it is on track to report full year results in line with its expectations.

The update prompted analysts at Goldman Sachs to raise their target price to 500p from 410p and repeat their "buy" rating on the firm.

Analysts at Numis, who also repeated their "buy" rating, said: "The combination of good growth with improving credit quality bodes very well for the 2011 performance. We would expect to see upgrades for this year."

While the snow in the UK has brought much of the country to a standstill, the markets that IPF operates in have been left fairly unscathed compared with last year when snow storms brought many European countries to a standstill.

IPF said the fourth quarter to date has been good, with the group reporting strong year on year growth in customers, credit issued and receivables.

"At the same time, collections performance remains strong, impairment has continued to improve and costs remain well controlled," said Mr Harnett.

With three significant weeks of trading to go before the year end, IPF said it is on track to report full year results in line with expectations.

The last week before Christmas will be particularly important as this is when customers borrow money to pay for festive food.

In the group's Hungarian market, the rate of corporation tax is to reduce from 19 per cent to 10 per cent with effect from 2013.

Mr Harnett said that whilst this is beneficial in the medium term, it will result in a reduction of 4m to 5m in the group's deferred tax asset.

As a result, the group expects this one-off charge to increase its effective tax rate for 2010 to around 33 per cent, but the effective rate will revert to around 28 per cent in 2011.

The group will announce its annual results in March next year.

IPF 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.

"Christmas is always an important period for us as we lend money for Christmas presents and family costs," said Mr Harnett.

During 2010 the group has 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.

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," said Mr Harnett. "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.

Helping hand with family budgets

International Personal Finance makes cash loans of between 150 and 500, mainly to women who are trying to manage the household budget.

Common reasons for borrowing money are to pay for Christmas, summer holidays and back-to-school necessities.

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

The group 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.

International Personal Finance established its first operations in Poland and the Czech Republic in 1997.