TIDMIPF
RNS Number : 3057R
International Personal Finance Plc
26 October 2023
26 October 2023
International Personal Finance plc
Q3 2023 trading update
International Personal Finance plc ("IPF" or the "Group") is
helping to build a better world through financial inclusion by
providing unsecured consumer credit to underserved customers across
nine markets.
Highlights
-- The good momentum from the first half has continued
through the third quarter, and the Group has continued
to perform ahead of internal plans.
-- Strong demand for our broad range of financial products
resulted in customer lending, excluding Poland, increasing
by 11% in the year to date.
-- Closing customer receivables of GBP875m showed an increase
of 4% year on year (at constant exchange rates (CER)),
or 15% excluding Poland.
-- Customer repayment performance remains robust and impairment
rates continue to track in line with our expectations.
-- Our business transformation and credit card roll out
in Poland is progressing well and, in line with our
plans, we have now issued more than 100,000 cards.
-- We have a strong balance sheet to fund growth with headroom
on undrawn facilities and non-operational cash balances
of GBP100m at 30 September 2023, an increase of GBP16m
since the half year.
-- We successfully secured GBP44m of debt facilities during
the third quarter and, more recently, priced GBP14m
of bonds in the Polish debt capital market.
Gerard Ryan, Chief Executive Officer at IPF commented:
"I am very pleased to report that the Group is trading well and
ahead of our internal plans. Demand for our product range is strong
and all our markets continue to deliver good growth in customer
lending and receivables, the only exception being Poland where, as
expected, lending has moderated as we adapt to serving our
customers under the new pricing and affordability regulations
there.
I am delighted with the progress we are making with our new
credit card offering in Poland, and we have now surpassed the
100,000 cards issued mark. The new product is clearly highly valued
by our customers who are using the added utility of a credit
card.
Credit quality is very good throughout the Group, and our
balance sheet and funding position remains robust. We continue to
make good progress in raising new funding and refinancing our
existing facilities which will support our future growth plans.
I would like to thank all our colleagues for their hard work and
efforts throughout 2023 which means that we are well-placed to
deliver good quality growth both in the remainder of 2023 and in
2024."
Group overview
All three of our divisions continued to perform well in the
third quarter as we continued to execute well against our strategy
to broaden our product set and extend our geographic reach. There
remains strong demand for our products and services, with customer
lending, excluding Poland, showing a year-on-year increase of 11%
in the year to date. As expected, Poland's lending declined year on
year as we transition the business through 2023 and 2024 to a
credit card focused business as well as adapting to new
affordability regulations. As a result, overall Group customer
lending has shown a year-on-year reduction of 1%.
Closing net receivables grew by GBP24m year on year (4% at CER)
to GBP875m at the end of the third quarter which, together with a
strengthened revenue yield, resulted in a strong increase in
revenue of 15%. Excluding the impact of the business transition in
Poland, Group receivables showed strong year-on-year growth of
15%.
Customer numbers reduced by 2% to 1.7m. However, excluding the
impact of the transition in Poland and the collect-outs of our
businesses in Spain and Finland, customer growth was 2%.
Our stakeholder-focused financial model is underpinned by a
stringent focus on revenue yield, impairment rate and cost-income
ratio, and we continued to make very good progress towards our
medium-term targets in the third quarter.
The Group annualised revenue yield continued to strengthen,
increasing by 4.0ppts to 54.8% year on year and 0.6ppts since the
half year, reflecting the positive impacts of lower levels of
promotional activity introduced during the second half of 2022 and
price increases in some of our markets.
We are pleased to report that our disciplined approach to
granting credit in a responsible manner continues to be reflected
in our good portfolio quality and robust customer repayments. We
have not seen any discernible impact from the cost-of-living crisis
on customer repayment performance and our balance sheet position
remains very robust with an impairment coverage ratio of 36.6%. The
Group a nnualised impairment rate of 12.0% at the end of September
(September 2022: 8.5%) is fully in line with our expectations as
impairment rates normalise and we continue to grow the
business.
Our tight control of costs combined with the strong uplift in
revenue delivered a significant 7.2ppt improvement in the Group's
annualised cost-income ratio from 63.9% to 56.7% over the last 12
months, and a further 0.7ppt improvement since the half year.
Divisional performance review
European home credit
Our European home credit division continued to execute well in
the third quarter, and consumer demand remains good. The Czech
Republic, Hungary and Romania combined delivered 15% lending growth
in the year to date, compared with the expected reduction of 23% in
Poland. As a result, European home credit lending in the year to
date is 2% down year on year. Closing net receivables increased
year on year by 2% (at CER) to GBP474m with 18% combined growth in
the Czech Republic, Hungary and Romania offset partially by a 17%
reduction in Poland. Customer repayment performance has remained
robust in all our European home credit markets.
In Poland, the rollout of our new credit card is progressing
very well and, at the end of the third quarter, we had issued more
than 100,000 cards, up from just over 50,000 at the half year.
Customers clearly value the utility of the credit card product, and
the level of retail and ATM transactions continue to increase. The
impairment performance of credit card customers is consistent with
instalment loans and is tracking in line with our expectations.
Mexico home credit
Mexico home credit continues to perform well. Consumer demand is
strong, and customer lending is up 5% year on year despite the
tighter credit standards implemented at the end of 2022. Customer
numbers grew by 2% to 710,000 and closing net receivables increased
by 8% year on year (at CER) to GBP185m. Customer repayment
behaviour has improved from the first half and credit quality is in
line with our plans, which is testament to our disciplined approach
to growth. Our expansion strategy is progressing well, and we are
pleased with the performance of our two new regions in Tijuana and
Tampico, launched in 2022 and early 2023 respectively.
IPF Digital
IPF Digital delivered another good performance in the third
quarter. Excluding Poland, year to date customer lending showed
strong growth of 12% with the Baltics, Mexico and Australia all
performing well. Lending in Poland saw a 36% reduction as we
transition to the new lower total cost of credit cap and
affordability rules. We continued to execute our growth strategy to
rebuild receivables to gain scale and deliver our target returns,
and this resulted in a 7% year-on-year increase in closing net
receivables to GBP216m (at CER) at the end of the third quarter.
Excluding Poland and the collect-out markets of Spain and Finland,
receivables growth was very strong at 20%. Alongside strong growth,
customer repayment performance has remained robust in all our
digital operations and portfolio quality is very good.
Funding and balance sheet
We continue to maintain a robust funding position and a
conservatively capitalised balance sheet to support growth and our
progressive dividend policy. At 30 September 2023, the Group had
total debt facilities of GBP608m comprising GBP419m of bonds and
GBP189m of bank facilities. We have borrowings of GBP519m and,
together with undrawn facilities and non-operational cash balances,
headroom is GBP100m.
During the third quarter we successfully secured GBP44m of debt
facilities, including GBP41m of bank facilities and GBP3m of retail
bonds held in treasury. In addition, as reported on 24 October
2023, we returned to the Polish debt capital market announcing the
successful pricing of PLN 72m (GBP14m) of new bonds . The new bonds
have a maturity of November 2026 and carry a floating rate coupon
of 6-months WIBOR + 8.50%. These positive outcomes on the Group's
current funding capacity together with strong business cash
generation, mean that we expect to meet our funding requirements to
the fourth quarter of 2024.
W e are today announcing that we have mandated Singer Capital
Markets Limited to arrange a series of calls with sterling fixed
income investors on 27 and 30 October 2023. An issue of
sterling-denominated retail eligible fixed rate, senior unsecured
notes may follow, subject to market conditions. Further details
(including certain important restrictions on investor eligibility)
are available at https://www.ipfin.co.uk/investors/regulatory-news
.
We are also actively pursuing a number of other opportunities to
diversify and extend the duration of our funding, including the
refinancing of the Eurobond.
R egulation
The EU Commission's review of the second Consumer Credit
Directive (CCD II) is now complete and will be published formally
in November and enter into force shortly after. EU Member States
have 24 months to comply with CCD II. The key areas of change
relevant to the Group include rules on pre-contractual information,
creditworthiness assessments and underwriting, documentation
training and consumer protection rules.
We continue to engage with the Polish financial supervision
authority, the Komisja Nadzoru Finansowego (KNF), as they assess
our application for a full payment institution licence which will
enable our Polish business to issue a greater volume of credit
cards in Poland.
Outlook
Our aim is to provide underserved consumers with access to
simple, personal and affordable credit and value-added services.
There is significant demand for affordable credit within our target
demographic, and we see substantial and sustainable long-term
growth opportunities through meeting the needs of more consumers
with an increased choice of products and distribution channels.
We will continue to maintain a cautious approach to lending
given the uncertain macroeconomic landscape and maintain tight cost
control across the Group to drive cost efficiencies.
Our strong performance through the first three quarters of the
year, together with our robust balance sheet and funding position,
gives us confidence in delivering a good performance for the year
as a whole and provides the foundation for delivering further
strong growth in 2024.
Investor and analyst conference call
International Personal Finance plc will host a conference call
for investors and analysts at 09.00hrs (BST) today, Thursday 26
October 2023.
To participate in the conference call please use the dial-in or
register online using the link below. Once registered, you will
receive an email with your online access link.
Dial-in by
phone +44 20 4587 0498
Access code 840491
Registration https://www.netroadshow.com/events/login?show=38ec88ac&confId=54943
for online access
Replay: An audio recording of the conference call will
be available in the investors section of our
website at www.ipfin.co.uk
For further information, please contact:
International Personal Finance plc
Rachel Moran (Investor Relations) +44 (0)7760 167637
Georgia Dunn (Deputy Company Secretary) +44 (0)7584 615230
A copy of this statement can be found on our website -
www.ipfin.co.uk
Legal Entity Identifier: 213800II1O44IRKUZB59
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END
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