UPDATE:Intl Personal Finance Cautious Despite 1H Profit Rise

22nd Jul 2010 09:45

(Adds executive comments and share price.) By Rachael Gormley Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K. lender International Personal Finance PLC (IPF.LN) Thursday said it would carefully manage its credit controls and growth plans despite a significant on-year rise in first-half pretax profit, pointing to economic risks from the fiscal tightening planned in Romania and Hungary. IPF, which provides small-sum doorstep loans in Eastern Europe and Mexico, increased its interim dividend 10% after first-half pretax profit surged to GBP36.9 million due to growing customer numbers and profitability in all of its markets for the first time. Chief Executive John Harnett said it was still cautious about expanding its geographic coverage and customer numbers, especially in Romania. "Romania is a text book new market, profitable in four years, but the outlook there is the most uncertain of all our markets," he said. Currently IPF covers around 60% of the Romanian market. Harnett said while at this stage of development it would usually open more branches, there would be no further expansion for the time being and "very tight" credit controls will remain in place. IPF said economic conditions improved in most of its markets in the first half, while its Mexican and Romanian units moved into profit for the first time. "Since mid-2009 we eased credit controls in all markets apart from Romania but they're still tighter than they were before the recession," Harnett said. The company said it has sufficient committed bank facilities to fund its business until October 2011, but will then need around GBP450 million of funding, including headroom. Finance Director David Broadbent said the firm hopes to raise somewhere between EUR200 million and EUR300 million on the public bond market in the second half after general market conditions halted the company's plans in the first half. The company is also currently in talks with its banks regarding longer-term banking facilities, Broadbent added. For the six months to June 30, IPF posted pretax profit of GBP36.9 million, compared with GBP12.4 million a year earlier. Revenue rose to GBP302.7 million from GBP265 million, and it raised its interim dividend to 2.53 pence a share from 2.30 pence a year earlier. Profitability was also helped by lower finance costs, which were down 11% on year due to reduced borrowings as a result of strong cash generation in its established markets. The company said the market consensus for 2010 pretax profit is between GBP88 million and GBP99 million but declined to comment on the forecasts. IPF said its customer base has grown 7.5% from June 2009 to 2.1 million, as growth in the developing markets of Mexico and Romania more than offset downsizing from the restructuring of its Hungarian business last summer. At 0834 GMT, shares were down 8.2 pence, or 4%, at 195.6 pence, while the wider FTSE All-Share was flat. -By Rachael Gormley, Dow Jones Newswires; 44-20-7842-9308; [email protected] (END) Dow Jones Newswires July 22, 2010 04:45 ET (08:45 GMT)