International Personal Finance slumps as Mexico problems hit profits

Profits slumped by more than a quarter at International Personal Finance in the first half as the company continued to endure ongoing problems in Mexico and invested further in its digital capabilities.

Although customer numbers grew 1.1% to 2.6m in the six months to end-June and revenue increased 1.5% to £353m thanks to a 6% rise credit issued, total adjusted pre-tax profit declined 29% to £30.7m, which the company argued was broadly within its expected range.

At the underlying level, profit before tax declined 22% to £9.7m before a £1.8m favourable currency movement and additional investment of £4.7m in IPF Digital,

But while there was strong growth in Southern Europe, with Poland stablising as new products are introduced to comply with new regulations, the FTSE 250 company continued to be dogged by tough trading in Mexico.

Having invested in the opening of 10 branches in Mexico but seen only minimal credit growth in the first quarter, the first half saw reported profit from the North American country fall 73% to £2.3m, with an underlying profit reduction of £5.1m accounting for just over half of the overall slump in underlying group PBT.

Chief executive Gerard Ryan said: "Growth in Mexico fell short of our expectations and we have responded to improve not only short-term performance but also to ensure that we capture the significant, long-term potential of this market."

Steps taken to address overall performance include slowing the pace of business change and geographic expansion, redirecting experienced leaders to our established regions and implementing a 'back to basics' programme.

Ryan added: "Our business is undergoing significant change as we address competition and regulation but our strategy reflects this changing dynamic and we are well placed to take advantage of growing demand within our target segment of consumers for digital loans. We are confident that our strategy will deliver sustainable, profitable growth to shareholders."

Despite the interim dividend being maintained at 4.6p per share, investors were less confident and the shares were down 21% to 266.8p by 1245 BST on Thursday.