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IPF boosts profits

International Personal Finance ticked all the right boxes last year, boosting customer numbers by 9 per cent to 2.4m but not at the expense of credit quality. By adhering to strict lending criteria, the lender managed to reduce impairments by 1.8 percentage points to 25.8 per cent of revenue. Profits would have been higher still without additional costs relating to more generous early settlement rebates, required under EU law, which rose by £13.3m.

Poland remained the group's biggest market, boosting profits by 35 per cent to £66m, although this included a £4.1m VAT refund. There was also good progress in Mexico, where management took steps to improve the agency network, resulting in higher collections and lower impairments. And while profits for the year fell from £3.5m to £1.5m, improvements started to show in the second half, with profits rising 29 per cent.

Given the challenging economic backdrop, it was hardly surprising that credit growth slowed markedly from a blistering 19.7 per cent in the second quarter to just 5.6 per cent in the fourth quarter. However, since then consumer confidence has shown a modest improvement, and credit growth has accelerated in the first two months of the current year.

Numis Securities is forecasting 2012 adjusted EPS of 25.1p (28.6p in 2011).

INTERNATIONAL PERSONAL FINANCE (IPF)
ORD PRICE:229pMARKET VALUE:£589m
TOUCH:228-229p12-MONTH HIGH:390pLOW: 145p
DIVIDEND YIELD:3.1%PE RATIO:8
NET ASSET VALUE:127p 

Year to 31 DecPre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200747.012.64.75
200876.321.55.70
200961.717.85.70
201088.223.36.27
2011100.530.27.10
% change+15+29+13

Ex-div: 18 Apr

Payment: 1 Jun

IC VIEW:

The shares have surged 65 per cent this year as global economic worries recede and now trade on nine times earnings estimates. That may seem cheap, but we remain cautious given uncertainty about early settlement rebate costs and foreign-exchange exposure. Hold.

Last IC view: Hold, 154p, 11 Jan 2012

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By Jonas Crosland,
29 February 2012

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