Increased competition and tightening regulatory restrictions continued to hurt lending growth at International Personal Finance’s (IPF) European operations during the first half. However, a jump of more than a quarter in credit issued by the sub-prime lender’s digital operations offset a contraction in the Mexican and European businesses, resulting in a 2 per cent rise in the group total.
The core European home credit business suffered another decline in customer numbers, which were down 15 per cent on the prior year at 1.13m, but solid returns from debt sales, a recovery in underlying impairments in Romania and a focus on higher-value customers improved the business’s impairment rate (as a proportion of revenues) by 3.2 percentage points to 17.6 per cent. That meant net revenue increased by 2 per cent, despite a reduction in lending.
After last year’s disruption, customer numbers in Mexico have started to improve, while credit issued was up 7 per cent, driven by branch openings and the micro-business lending product. During the second half, management says it will focus on improving quality and expects an increased lending growth rate of between 12 and 15 per cent for the full year.
Analysts at Shore Capital expect adjusted net tangible assets of 170p a share at December 2018, down from 197p at the same time in 2017.
| INTERNATIONAL PERSONAL FINANCE (IPF) | ||||
| ORD PRICE: | 221.8p | MARKET VALUE: | £496m | |
| TOUCH: | 221.4-222p | 12-MONTH HIGH: | 259p | LOW: 175p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 173p | LEVERAGE: | 3.5 | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 401 | 43.0 | 13.6 | 4.6 |
| 2018 | 419 | 56.5 | 16.7 | 4.6 |
| % change | +4 | +31 | +23 | - |
| Ex-div: | 06 Sep | |||
| Payment: | 05 Oct |
