Increased competition and tough new regulation in some of its European markets hampered sub-prime lender International Personal Finance (IPF) last year. Following the Slovakian government's decision to introduce a new rate cap on consumer loans, management decided to shut down operations there. The group booked £18.6m in exceptional wind-down costs and expects the business to incur between £5m and £7m in losses this year. Chief executive Gerard Ryan says the cap has been set too low for the group to continue making money. "Having an agent-led model is too costly," he says.
A tightening interest rate cap and intensifying competition from payday and digital lenders resulted in a 4 per cent reduction in revenue for IPF's Polish-Lithuanian business. A cap on all non-interest costs associated with consumer credit will also come into effect at the end of March in Poland. Management hopes a planned product launch there will mitigate around half the £30m consequent losses.
The picture was brighter in Mexico. As a result of a booming population and the exclusion of a large proportion from mainstream lending, the group generated a rise in pre-tax profit of around a third to £21.9m.
Analysts at Numis expect adjusted EPS of 31.3p for 2016, down from 37.1p in 2015.
INTERNATIONAL PERSONAL FINANCE (IPF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 222p | MARKET VALUE: | £491m | |
| TOUCH: | 221-223p | 12-MONTH HIGH: | 512p | LOW: 216p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 148p | |||
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 650 | 101 | 30.2 | 7.1 |
| 2012 | 652 | 90 | 29.4 | 7.74 |
| 2013 | 747 | 131 | 39.2 | 9.3 |
| 2014 | 783 | 100 | 30.2 | 12 |
| 2015 | 735 | 100 | 27.3 | 12.4 |
| % change | -6 | - | -10 | +3 |
Ex-div: 7 Apr Payment: 13 May | ||||
