International Personal Finance Plc Q1 2018 Trading Update (0959N)
May 04 2018 - 2:00AM
UK Regulatory
TIDMIPF
RNS Number : 0959N
International Personal Finance Plc
04 May 2018
International Personal Finance
Q1 2018 trading update
4 May 2018
Highlights
-- Credit issued growth of 3%, in-line with our expectations
o European home credit contracted by 4%
o Mexico home credit growth of 5%
o IPF Digital growth of 24%
-- European home credit delivered a good operational performance
-- Mexico home credit performed in-line with our expectations
-- IPF Digital delivered strong top-line growth and improved
credit quality
-- Good credit quality and collections - Group annualised
impairment as a percentage of revenue of 26.4%*
-- Robust funding position - GBP189M of headroom on debt
facilities at 31 March 2018
* All impairment as a percentage of revenue figures within this
statement reflect a conversion from IAS39 to IFRS 9
Group Q1 overview
The Group made a good start to the year and traded in line with
our expectations. Credit issued increased by 3% driven by IPF
Digital and Mexico home credit, offset partially, as expected, by a
modest contraction in our European home credit markets. Credit
quality and collections remain good and annualised impairment as a
percentage of revenue was 26.4% compared to 27.8% at the 2017 year
end.
European home credit
As previously advised, we have now consolidated our Northern and
Southern European home credit businesses into one reporting
segment. European home credit generates the cash and the capital
that is used to fund our growth opportunities and returns to
shareholders. Credit issued contracted year-on-year by 4%
reflecting a continued challenging regulatory and competitive
environment, together with a stronger than expected performance in
Romania offset by a slightly weaker outcome in the other markets.
The quality of the loan portfolio remains good and a strong
collections performance supported an improvement in annualised
impairment as a percentage of revenue to 19.0% from 20.7% at the
2017 year end.
Mexico home credit
Our home credit operation in Mexico performed well and delivered
a 5% increase in credit issued growth in the first quarter against
strong comparative numbers. This was in line with our expectations.
We expect this rate of growth to accelerate as we move through 2018
driven by geographical expansion, increased micro-business lending
and improving customer penetration rates in selected
longer-established branches. For the year as a whole, our
expectations for credit issued growth remain unchanged at around
12% to 15%. We delivered a solid collections performance and
annualised impairment as a percentage of revenue under IFRS9 was
36.1%, in line with the 2017 year-end outcome. Looking ahead, we
plan to expand our geographic footprint further in Mexico with the
opening of five new branches during the second quarter of the
year.
IPF Digital
There is positive momentum in IPF Digital which made good
progress in Q1 with credit issued growth of 24%. Our established
markets delivered 21% growth driven by a very good performance in
Finland where demand for our credit line product was notably
strong. We expect this rate of growth to moderate throughout 2018.
Our new markets, where we are working to develop each market's
processes to optimise lending and collections, delivered
year-on-year credit issued growth of 29%. We expect this growth
rate to increase driven by further investment in marketing in
Poland and Spain. Credit quality was in-line with our expectations
and annualised impairment as a percentage of revenue for IPF
Digital as a whole improved to 41.1% from 45.6% at the 2017 year
end.
Funding
We maintained our robust funding position and at 31 March 2018
we had total debt facilities of GBP845M and borrowings of GBP656M,
with headroom on undrawn bank facilities of GBP189M.
Regulation
As mentioned in our 2017 full-year results announcement, a
proposal to implement an APR cap at 18% for existing and new
consumer lending is being debated in the Romanian Parliament and we
are contributing to this discussion. We believe it highly likely
that an APR cap will be enacted prior to our next scheduled trading
update. If enacted as currently proposed, it would have a material
adverse effect on our Romanian business. That business had net
receivables as at 31 December 2017 of GBP93.4M and we currently
expect that it would generate a profit before tax of around GBP10M
in 2018, before any impact from this APR cap proposal. If an APR
cap is introduced during this period, we will complete our
assessment of its likely financial impact based on the final form
of the cap and update the market in our half-year trading
announcement.
There has been no update from the Polish Ministry of Justice on
its proposal, published in December 2016, to reduce the existing
non-interest pricing cap in Poland.
Outlook
We remain focused on serving our customers responsibly within a
regulatory and competitive landscape that we expect will remain
challenging. We continue to improve the sustainability of our
European home credit businesses by investing to create a more
modern, efficient and higher credit quality operation that provides
a good service to customers and delivers strong returns to reward
shareholders and fund growth opportunities in our Mexico home
credit and IPF Digital operations.
Investor and analyst conference call
International Personal Finance will host a conference call for
investors and analysts at 08.30 (BST) today. Please dial-in 5-10
minutes before the start of the call.
+44 (0)330 336
Dial-in (UK) 9105 Confirmation code: 6231002
Replay: An audio recording of the conference call will be
available in the investors section of our website
at www.ipfin.co.uk
A copy of this statement can be found on the Company's website -
www.ipfin.co.uk
Investor relations and media contacts:
International Personal Finance Rachel Moran - Investor Relations
+44 7760 167637 / +44 113 285 6798
Gergely Mikola - Media
+36 20 339 02 25
FTI Consulting Neil Doyle
+44 20 3727 1141 / +44 7771 978
220
Laura Ewart
+44 (0)20 3727 1160 / +44 (0)7711
387085
Legal Entity Identifier: 213800II1O44IRKUZB59
This information is provided by RNS
The company news service from the London Stock Exchange
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