LONDON (Alliance News) - International Personal Finance PLC Wednesday said its pretax profits for 2013 rose by 45% after solid revenue growth, driven by the home credit lender's expansion into new markets and an increase in the credit it issued.
Pretax profit rose to GBP130.5 million from GBP90.3 million in 2013, as revenue rose by 10% to GBP746.8 million. IPF booked a GBP12.4 million exceptional gain from the sale of impaired receivables originating from loans issued in Poland for GBP15.9 million, while it wrote down IT assets at a cost of GBP3.5 million.
Excluding exceptional items, pretax profit grew by 24% to GBP118.1 million. The company's shares rose to the top of the FTSE 250, up 5.7% at 532.50 pence.
Revenue growth for IPF, which makes small, short-term unsecured loans, was driven by a 19% increase in the credit it issued to GBP1.05 billion. It also added 163,000 more customers, meaning it boasted about 2.6 million customers in 2013.
"In addition to maintaining very good portfolio quality, we entered two new markets, developed our product range and made good progress in our funding objectives," Gerard Ryan, chief executive, said in a statement. The home credit lender entered Lithuania and Bulgaria in 2013.
Ryan admitted "heightened regulatory challenges" but said he is confident of further growth in 2014 and beyond.
Concerns about the shadow banking sector, made up of the institutions acting like banks but not regulated as stringently, have attracted increasing interest from regulators, who are concerned that too much lending by the sector could contribute to a repeat of the 2008 financial crisis. Much of the debate across Europe has been on interest-rate caps, which could affect the amount that lenders such as International Personal Finance are allowed to charge borrowers for loans.
International Personal Finance said several countries it operates in, such as Poland, are considering stricter rules on rates.
The lender also reiterated that it plans to appeal the GBP2.4 million fine its Polish business was handed by UOKiK, the Polish Office of Consumer Protection and Competition, on Christmas Eve. In an unwelcome present, the UOKiK said the way International Personal Finance calculates its annual percentage rate amounts to "a collective infringement of consumer interests".
"We disagree with UOKiK's decision and have legal opinion supporting our view that the way we calculate our fees is correct. We have submitted our appeal and the decision is now expected to go through the court appeal process," IPF said in its statement Wednesday.
If the appeal process fails IPF would be required to update our loan documentation and marketing to include the relevant fees in the total cost of credit and APR calculations.
"UOKiK is also reviewing the practices of a number of non-bank consumer credit providers, in respect of the calculation of fees for loan products. Our charging methodologies are in line with industry standards but, as part of this review, we are exploring alternatives in respect of certain elements of the product structure with UOKiK," IPF said, adding that it doesn't expect any of the matters to have a significant impact on business performance or growth prospects.
International Personal Finance increased its full-year dividend to 9.3 pence from 7.7 pence. The lender said the increased dividend reflects the strong underlying trading performance and the cash generative nature of its business model.
By Samuel Agini; firstname.lastname@example.org; @samuelagini
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