International Personal Finance PLC (LON:IPF) shares fell on Friday as the doorstep lender reported a fall in its European home credit business in the first quarter of 2018, although overall trading was in line with expectations.
In a trading update, the FTSE SmallCap firm said European home credit contracted by 4%, reflecting a continued challenging regulatory and competitive environment, with annualised impairment as a percentage of revenue decreasing to 19% from 20.7%.
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However, overall IPF saw credit issued growth of 3% in the first three months of the year, with IPF Digital growing by 24%, with established markets delivering 21% growth, driven by ‘a very good performance’ in Finland, while new markets delivered year-on-year credit issued growth of 29%.
IPF said its home credit operation in Mexico delivered a 5% increase in credit issued growth and the firm said it expects this rate of growth to accelerate to 15% for the whole year, up from 12%, driven by the planned opening of five new branches in the second quarter of 2018.
The company said it maintained robust funding position and as at March 31 had total debt facilities of £845mln and borrowings of £656mln, with headroom on undrawn bank facilities of £189mln.
The firm added that credit quality and collections remain good and annualised impairment as a percentage of revenue was 26.4% compared to 27.8% at the 2017 year-end.
IPF said: “We continue to improve the sustainability of our European home credit businesses by investing to create a more modern, efficient and higher credit quality operation that provides a good service to customer and delivers strong returns to reward shareholders and fund growth opportunities in our Mexico home credit and IPF Digital operations.”
In lunchtime trading, IPF’s shares were down 1.7% to 233.8p.