Refinancing costs and the strong pound hit half-year pre-tax profit at International Personal Finance (IPF). The Eastern Europe-focused doorstep lender spent £22.6m buying back its existing Eurobonds. Adjust for that, however, and pre-tax profit rose 11 per cent year-on-year to £47.1m.
That reflected a robust performance in the core Polish business, where profit grew 23 per cent to £28.5m, but also in Hungary and Mexico. Despite the growth management says credit quality remains strong, with impairments in the middle of the company’s targeted range (of 25-30 per cent of revenue). IPF is to establish in Spain, too. Management thinks the sub-prime loan market there is sufficiently undeveloped to support a 400,000-strong customer base once the unit reaches maturity.
But regulatory pressures are apparent, with varying forms of credit cap being proposed in most of its markets. Indeed, a big regulatory shake-up in Slovakia - combined with tough competition in the Czech Republic - sapped profit at the Czech-Slovak unit by 18 per cent. Polish regulators also fined IPF in December over its APR rate calculation. Management thinks it can overturn that, and a court hearing is expected in 2015. If it fails, however, a major restructuring of its Polish product offering is possible.
Broker Numis Securities expects full-year EPS of 32.7p (39.2p in 2013), recovering to 51.2p in 2015.
INTERNATIONAL PERSONAL FINANCE (IPF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 573p | MARKET VALUE: | £1.36bn | |
| TOUCH: | 572-574p | 12-MONTH HIGH: | 683p | LOW: 390p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 156p | |||
| Half-year to 30 Jun | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2013 | 54.7 | 16.2 | 3.8 |
| 2014 | 24.5 | 6.7 | 4.2 |
| % change | -55 | -59 | +11 |
Ex-div:03 Sep Payment:03 Oct | |||
