International Personal Finance Plc Q1 2017 Trading Update (9602D)
May 03 2017 - 1:00AM
UK Regulatory
TIDMIPF
RNS Number : 9602D
International Personal Finance Plc
03 May 2017
International Personal Finance
Q1 2017 trading update
3 May 2017
Highlights
-- Group Q1 growth in credit issued of 5%
o Mexico home credit grew by 20%
o Europe home credit decreased by 7%
o IPF Digital grew by 61%
-- Group Q1 customer numbers decreased by 2%*
o Mexico home credit grew by 4%
o Europe home credit contracted by 9%
o IPF Digital grew by 47%
-- Good credit quality - group impairment as
a percentage of revenue in target range
at 27.0% with improved performance in Mexico
-- GBP133.5M of headroom on debt facilities
at 31 March 2017
-- No development on proposal to further reduce
existing cap on non-interest charges on
consumer loans in Poland, but continue to
operate in line with previous guidance under
existing total cost of credit cap introduced
in March 2016
* Customer numbers adjusted following change to treatment of
very slow paying customers in our home credit businesses in
December 2016.
Group Q1 overview
We delivered credit issued growth of 5% driven by IPF Digital
and a return to higher levels of growth in our Mexico home credit
business, offset partially by lower growth in Southern Europe which
was impacted by new creditworthiness assessment regulations in
Romania. Customer numbers contracted year-on-year by 2% primarily
as a result of competitive pressures in the Czech Republic and
Poland. Impairment as a percentage of revenue was 27.0% and remains
within our target range of 25% to 30%.
Home credit
In Mexico, the operational actions taken in 2016 to improve
performance resulted in the growth momentum achieved during the
second half of last year being maintained and year-on-year we
delivered a 20% increase in credit issued and 4% growth in customer
numbers to 844,000. This growth was balanced with an improved
collections performance and, as a result, impairment as a
percentage of revenue reduced by 2 ppts to 34.5% since the 2016
year end. We expect to see further improvements in this measure
over the course of 2017. We continued to invest in geographical
expansion, opening two new branches in Q1 and we plan to launch two
more during the second quarter of the year.
We are continuing to focus on optimising returns from our
European home credit operations. In Poland, the expected impact of
total cost of credit legislation introduced in March 2016 together
with the challenging competitive landscape resulted in a
contraction in credit issued and customer numbers of 2% and 11%
respectively. Looking ahead, we expect to deliver growth during the
rest of 2017 because the comparator period in 2016 was impacted
negatively by the implementation of the total cost of credit
legislation. Highly competitive trading conditions continued to
impact the size of our business in the Czech Republic and resulted
in a 23% contraction in credit issued and a 17% reduction in
customer numbers year-on-year. In order to simplify our management
structure, continue our cost efficiency drive and maximise the
opportunities for sharing best practice, we have consolidated the
management of our Polish and Czech businesses under the leadership
of David Parkinson, the country manager for Poland.
As indicated at the time of our 2016 full-year results, new
creditworthiness assessment regulations introduced in Romania at
the beginning of 2017 impacted growth levels in Southern Europe.
Credit issued reduced by 5% reflecting growth in Hungary and
Bulgaria but offset by a contraction in Romania. Customer numbers
in the region reduced by 2%. We have implemented new processes and
training to ensure compliance with the new regulations in Romania
and are working to improve the performance in this market.
Credit quality and collections in the home credit business
overall were good and annualised impairment as a percentage of
revenue at 26.4% remains consistent with our 2016 full year outcome
and is well within our target range of 25% to 30%. In Slovakia,
where we are winding down our home credit business, we concluded
our field collections activities in March and expect to move into
the liquidation phase of this process by the end of the first half
of 2017.
IPF Digital
IPF Digital continued to deliver strong growth in the first
quarter of the year increasing credit issued by 61% and active
customer numbers by 47% to 212,000. This performance was driven
primarily by our new digital markets of Poland, Australia, Spain
and Mexico where credit issued growth was 254%. Our established
markets of Finland and the Baltics delivered credit issued growth
of 19%. Annualised impairment as a percentage of revenue was 33.2%
which compares to 30.1% at the December 2016 year end and reflects
the increased weighting of new markets in the digital business. We
continue to expect to invest around GBP8M to GBP10M in developing
IPF Digital in 2017 and deliver the division's maiden profit in
2018.
Funding
At 31 March 2017 we had total debt facilities of GBP791.8M and
borrowings of GBP658.3M, with headroom on undrawn bank facilities
of GBP133.5M after making payments to the Polish tax authority of
GBP38M in January 2017 in respect of the 2008 and 2009 disputed tax
audit decisions. As stated previously, we strongly disagree with
the interpretation of the Polish tax authority and will defend our
position robustly in court.
Regulation
There have been no material changes to the regulatory framework
since our 2016 full-year results announcement. There has been no
update on the Polish Ministry of Justice's proposal to further
reduce the existing cap on non-interest charges on consumer loans
in Poland and we are continuing to engage with various Government
ministries and interested parties in this market to encourage a
more positive solution that is good for consumers and business.
Outlook
We will continue to optimise the performance of our European
home credit businesses to fund growth in our IPF Digital and Mexico
home credit operations. In Mexico, we remain focused on balancing
good growth with improving collections and expect to deliver
further strong growth in IPF Digital.
Investor and analyst conference call
International Personal Finance will host a conference call for
investors and analysts at 08.30 (BST) today. Please dial-in 5-10
minutes before the start of the call.
+44 (0)330
Dial-in (UK): 336 9411 Dial-in (USA): +1 719-325-2385
Confirmation
code: 5525928
Replay: An audio recording of the investor
and analyst conference call will
be available at www.ipfin.co.uk
A copy of this statement can be found on the Company's website -
www.ipfin.co.uk
Investor relations and media contacts:
International Personal Rachel Moran - Investor Relations
Finance +44 7760 167637 / +44 113
285 6798
Gergely Mikola - Media
+36 20 339 02 25
FTI Consulting Neil Doyle
+44 20 3727 1141 / +44 7771
978 220
Jessica Colman
+44 20 3727 1102 / +44 7515
597 868
Legal Entity Identifier: 213800II1O44IRKUZB59
This information is provided by RNS
The company news service from the London Stock Exchange
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