International Personal Finance Plc Q3 2019 Trading Statement (7171R)
31 Octubre 2019 - 01:00AM
UK Regulatory
TIDMIPF
RNS Number : 7171R
International Personal Finance Plc
31 October 2019
International Personal Finance
Q3 2019 trading update
31 October 2019
International Personal Finance plc specialises in providing
unsecured consumer credit to more than two million customers across
11 markets. We operate the world's largest home credit business and
a leading fintech business, IPF Digital.
Highlights
-- On track to deliver full-year 2019 profit before tax
in line with consensus expectations
-- Q3 credit issued growth of 1%
o European home credit growth of 6% driven by continued
strong operational performance
o Mexico home credit contracted by 12% due to continued
prioritisation of credit quality over growth
o IPF Digital delivered growth of 3% - on track to
deliver maiden profit in 2019
-- Group impairment in middle of target range at 27.8%
of revenue
-- Settlement of Polish tax dispute for the period 2010
to 2017
-- Strong funding position - GBP197 million of headroom
on debt facilities
Group Q3 overview
We delivered a solid Group performance in Q3. Year-on-year, we
delivered a 1% increase in credit issued with a continued strong
operational performance in European home credit offset partially by
Mexico. Group impairment as a percentage of revenue was in line
with the 2019 half-year and in the middle of our target range at
27.8%, reflecting a combination of very strong credit quality in
European home credit and more challenging performances in Mexico
home credit and IPF Digital's new markets.
European home credit
We continue to deliver well against our strategy of improving
the sustainability of our home credit businesses in Europe by
creating more modern, efficient and better credit quality
operations. The excellent operational execution delivered by our
teams in these markets resulted in 6% growth in credit issued
year-on-year reflecting our strategy of issuing slightly
longer-term loans to our better-quality customers. Customer numbers
were 1,012,000 and the rate of contraction of 9% is consistent with
the 2019 half-year. Credit quality is very strong due to continued
good agent collections performance alongside stable post-field
collections and this delivered a 1.5ppt improvement in annualised
impairment as a percentage of revenue since the half year to
14.2%.
Mexico home credit
As reported in our 2019 half-year financial report, we are
currently prioritising improving credit quality over growth and
delivering greater execution consistency in order to improve our
financial performance in Mexico. To support this we implemented a
series of operational actions to improve agent collections and
there have been some encouraging signs in early lead key
performance indicators. Year-on-year, customer numbers reduced by
7% to 837,000 and credit issued contracted by 12% due to the focus
on credit quality and significantly stronger comparatives.
Annualised impairment as a percentage of revenue of 41.2% was
broadly in line with that reported at the half year. We will
continue to focus on delivering consistency of execution to improve
the credit quality and we expect to recommence growth in 2020,
allowing us to benefit from the significant growth opportunities
that this market presents.
IPF Digital
IPF Digital remains on track to deliver its maiden profit in
2019. Year-on-year credit issued growth was 3% comprising a 7%
increase in our established markets and a new market performance
that was in line with Q3 2018. Additionally, customer numbers
increased by 18% to 316,000 driven by growth in the new markets.
Annualised impairment as a percentage of revenue increased by
2.0ppts since the 2019 half year to 43.7% driven by the new
markets. Our focus on improving credit quality in these markets and
our response to tighter rate caps recently introduced in Finland
and Latvia means that credit issued in the second half of 2019 will
be broadly similar to the first half.
Taxation
As announced on 24 October 2019, the Polish tax authority closed
its audits of the 2010, 2011 and 2012 financial years for our
Polish home credit company which included a challenge to the
pricing of an intra-group arrangement with a UK Group company. In
view of the ongoing nature of this arrangement, the tax authority
also proposed adjustments to the tax base for later years. We did
not contest these findings and accepted the tax authority's
proposed adjustments for the years 2010 to 2017 inclusive. This
gave rise to an overall payment of GBP3.8 million for these years.
The court proceedings with respect to the 2008 and 2009 financial
years continue to be stayed pending the outcome of a process
involving the UK and Polish tax authorities aimed at ensuring that
the intra-group arrangement in question is taxed in accordance with
international tax principles. Having agreed the treatment of the
matters challenged by the Polish tax authority for 2010 to 2017, we
remain very positive of reaching a good outcome for 2008 and
2009.
Funding
We further strengthened our debt funding position by adding
GBP20 million of new bank funding in Q3, and at 30 September 2019
we had total debt facilities of GBP912 million and borrowings of
GBP715 million, with headroom on undrawn bank facilities of GBP197
million. We made further progress on extending debt facilities and
now have GBP326 million of facilities extending beyond the Eurobond
maturity in the second quarter of 2021. The settlement of the
Polish tax dispute removes a significant liquidity risk for IPF.
This will allow more flexibility in the refinancing of the
Eurobond, which we aim to complete by the end of 2020.
Regulation
There has been no material update on the Polish Ministry of
Justice's proposals to reduce the existing cap on non-interest
costs that may be charged by lenders in connection with consumer
loan agreements - details of which were provided in our 2019
half-year results statement.
UOKiK, the Polish competition and consumer protection authority,
is conducting a comprehensive review of rebating practices by banks
and other consumer credit providers on early loan settlement,
including those of the Group's Polish businesses. In light of this
and a recent European Court of Justice declaratory judgment on the
matter, we expect new market standard rebating practices to evolve
in Poland and, potentially, other markets in the EU. When we have
clarity on the new emerging standards, we will conform our rebating
practices in line with these standards and update the market on the
potential financial impact.
2019 outlook
Our outlook for the Group in 2019 remains unchanged since the
half-year report and we are on track to deliver full-year profit
before tax in line with consensus expectations. We expect European
home credit to continue to deliver a strong operational
performance. We continue to focus on delivering an improved
operational performance in Mexico alongside greater execution
consistency to deliver progressive improvements in profitability
and create the platform to recommence growth. In IPF Digital we
remain on track to deliver a maiden profit in 2019.
Investor and analyst conference call
International Personal Finance will host a conference call for
investors and analysts at 09.00hrs (GMT) today,
Thursday 31 October. Please dial-in 5-10 minutes before the start of the call.
Dial-in (UK) +44 (0)330 336 Confirmation code: 5113342
9125
Replay: An audio recording of the conference call will be
available in the investors section of our website
at www.ipfin.co.uk
A copy of this statement can be found on our website -
www.ipfin.co.uk
Investor relations and media contacts:
International Personal Finance Rachel Moran
+44 7760 167637 / +44 113 285 6798
FTI Consulting Neil Doyle
+44 20 3727 1141 / +44 7771 978
220
Laura Ewart
+44 (0)20 3727 1160 / +44 (0)7711
387085
Legal Entity Identifier: 213800II1O44IRKUZB59
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END
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