International Personal Finance (IPF) is once again in the firing line as Polish legislators plan new restrictions on consumer lender charges. The Polish Ministry of Justice has proposed a further reduction in the non-interest charges to 75 per cent of the loan value from 100 per cent. Shares in the sub-prime lender fell by as much as 44 per cent on the day of the announcement but have since recovered some ground.
The initial total-cost-of-credit legislation came into effect in March. As a result, the group introduced a new product range to comply with the legislation and help mitigate the impact on profitability, including offering credit with longer repayment times. At the time management estimated that - without taking any mitigating actions - it would suffer a £30m reduction in profit by applying the new pricing regime to loans written during the year to June 2015. However, it estimated mitigating actions would offset around half of this impact. During the first half the Poland-Lithuania business accounted for around two-thirds of overall pre-tax profit.
Management says it is "reviewing the proposal to assess the extent to which the profitability of its Polish business would be affected by the proposed new changes, should they be implemented, and is also examining appropriate mitigation strategies to minimise any potential impacts".
