Its confidence boosted by a 35 per cent increase in underlying profits, International Personal Finance's (IPF) management of the overseas-focused doorstep lender unveiled a £60m share buyback plan in its half-year results, sending the shares flying. The emerging market doorstep lender has benefited from experimenting with longer loans to loyal customers. Even though borrower numbers grew by only 3 per cent year on year - below expectations - the volume of credit issued by IPF rose 14 per cent. The proportion of bad loans, meanwhile, stayed flat at 26.8 per cent of revenues, resulting in decent profit growth.
The company hopes to improve growth in customer numbers in the second half. Its most ambitious plan is to open a branch in Mexico City, which has a population of over 20m. IPF has been operating in Mexico for a decade, but chief executive Gerard Ryan has until now been wary of entering the capital city, where borrowers are more footloose and collection agents more exposed to muggers. The company also has plans to make its first loans in Bulgaria in September, following its launch in Lithuania in July.
The share buyback plan is the result of a review of the company's equity-to-receivables ratio. Equity of £404m currently amounts to 59 per cent of receivables, which management concluded was too cautious in light of the improving financial environment. The buybacks will reset the ratio to 50 per cent.
Brokerage Numis Securities expects full-year pre-tax profits of £135m, giving EPS of 40p - up from £90.3m and 29p, in 2012.
INTERNATIONAL PERSONAL FINANCE (IPF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 646p | MARKET VALUE: | £1.61bn | |
| TOUCH: | 645.5-646p | 12-MONTH HIGH: | 646p | 275p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 162p | |||
| Half-year to 30 Jun | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2012 | 25.8 | 7.33 | 3.23 |
| 2013 | 54.7 | 16.20 | 3.80 |
| % change | +112 | +121 | +18 |
Ex-div: 4 Sep Payment: 4 Oct | |||
