High-cost credit provider International Personal Finance (IPF) ended 2019 with 8 per cent fewer customers than it started. But a focus on improved credit quality, supported by benign market conditions in its core European markets, ensured that both profits rose and overall credit issuance remained in line with the prior-year period.
There was positive news elsewhere. After a challenging period for collections in the first half of the year, the Mexico division saw improved loan performance and a stabilising impairment-to-revenue ratio in the six months to December 2019. IPF’s digital arm – on which medium-term profit growth hopes are pinned – also posted a maiden profit of £3.2m.
Risks to the balance sheet have also abated after Poland’s tax authority found that lower adjustments were required for historic accounts than previously forecast, thereby removing a £137m contingent liability. In theory, this bodes well for the refinancing of £84m-worth of bonds this summer, and a £344m eurobond which matures in April 2021.
However, the potential for setbacks remains. Management said the introduction of a total credit cap in Poland could lead to a profit hit of between £5m and £15m, while the group is waiting to learn the result of a review to consumer lending rules in Romania. It also remains to be seen whether European wage growth will continue in 2020.
Analysts at house broker Numis forecast earnings of 29.2p per share in 2020, rising to 31.7p in FY2021.
| International Personal Finance (IPF) | |||||
| ORD PRICE: | 162p | MARKET VALUE: | £361m | ||
| TOUCH: | 162-163p | 12-MONTH HIGH: | 210p | LOW: | 86.8p |
| DIVIDEND YIELD: | 7.6% | PE RATIO: | 5 | ||
| NET ASSET VALUE: | 196p | NET DEBT: | 151%* | ||
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 735 | 100 | 27.3 | 12.4 |
| 2016 | 757 | 96 | 30.2 | 12.4 |
| 2017 | 826 | 106 | 20.2 | 12.4 |
| 2018 | 866 | 109 | 33.8 | 12.4 |
| 2019 | 889 | 114 | 32.2 | 12.4 |
| % change | +3 | +4 | -5 | - |
| Ex Div: | 9 Apr | |||
| Payment: | 11 May | |||
| *Includes lease liabilities of £19.5m | ||||
