The doorstep lender International Personal Finance (IPF) is to return a pile of cash to shareholders after reporting a big rise in customer numbers and underlying profits at the half year stage.
The company provides credit for households who may struggle to borrow money through conventional channels. The key for Leeds-based IPF is its focus on emerging markets; it makes its money in Poland, Romania, Hungary, Czech Republic, Slovakia and Mexico.
In the six months to the end of June the group had 2.46m customers, up from 2.29m at the same point last year. Combined, those clients had taken out loans worth £409.3m. On a constant currency basis that's a 12.2% increase on 2011.
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Foreign exchange (FX) movements were a big problem, though, for International Personal Finance, which last year had to issue a profit warning as the pound strengthened and the currencies in which it generates revenues weakened. It is this currency effect which is partly to blame for underlying profits before tax coming in at £31.4m, down on the £35.7m seen at the same point of 2011.
IPF also struggles when people pay their debts early, the so-called "early settlement rebate". Stripping out both the FX and rebate issues, the profits before tax figure showed growth of £7.5m.
To reflect the underlying performance and with cash flowing in to strengthen an already healthy balance sheet, IPF has announced an interim dividend of 3.23p per share, a rise of 7.5% on the prior year, plus a £25m into a share buyback programme.
These two moves pushed the share price up nearly 7% in morning trading, although IPF's stock is still 26% down over the last 12 months.
Chief Executive Officer, Gerard Ryan, commented: "We are on track to perform well for the year as a whole, aim to deliver stronger growth and make our balance sheet work harder, and we have the strategy in place to do this."
BS
