Profits jump at International Personal Finance despite Polish hit

Shares in International Personal Finance sparked on Thursday, after the London-listed firm posted above-forecast earnings.

IPF, which specialises in affordable credit and insurance products, said pre-tax profits rose 8.4% in the year to 31 December to £83.9m, ahead of internal expectations. Earnings per share jumped 11.5% to 23.2p.

The market had been expecting pre-tax profits closer to £74m.

As at 1145 GMT, shares in IPF were up 12% at 112.5p.

IPF said strong demand for its financial products had resulted in an 8% jump in customer lending, excluding Poland. Closing net receivables rose 12% on the same basis, to £893m.

Lending and receivables in Poland fell by 29% and 25% respectively, as expected, due to changing regulation and the rollout of a new credit card product.

Looking forward, IPF said it expected Poland’s new pricing regulation to reduce ongoing pre-tax profits by up to £10m per annum, assuming all of the regulator’s expectations were implemented in full.

However, Gerard Ryan, chief executive, reiterated IPF's commitment to the Polish market.

"We are now serving more than 130,000 customers with this exciting new offering, and we continue to adopt and change our Polish business to customer needs and ongoing changes in regulation," he said.

He continued: "Our relentless focus on meeting our customers’ needs, combined with strong cost control and good capital management, has driven a very positive financial and operational performance for 2023.

"Our strong performance, together with our robust capital and funding position, provides a great foundation for delivering further good growth and continuing to successful execute against our strategy in 2024."

Shore Capital upgraded to the stock to ‘buy’ from ‘under review’ following the results.

Analyst Gary Greenwood said: "We would provisionally expect to reduce our 2024 pre-tax profit estimate into a range of £70m-£75m, from £83m, to reflect the potential impact of the new Polish regulation."

But he continued: "Even if the profit impact of Polish regulatory risk is double management’s forecast - which we understand would wipe out the entire profitability in Poland - this would only add around 1 x to the PER multiple.

"We think the shares remain attractively valued, and hence move the stock back to a ‘buy’."