International Personal Finance PLC (LON:IPF) said its collections performance continues to improve and it expects lending volumes to “increase moderately” in June as coronavirus lockdown restrictions are eased in Europe and Mexico.
Group collections effectiveness improved to 80% of pre-coronavirus levels in May from 76% in April, driven largely by the European doorstep lending division credit where there was an increase in the proportion of agents visiting customers and alternative repayment options were implemented.
Credit issuance continued to run at c30% of budget levels in May, similar to April and cash flow of £43mln was generated in May as collections, cost reduction and sales volumes improved, compared to the £41mln generated in April.
Cash and headroom on undrawn debt facilities was £223mln at the end of May after repaying £44mln of sterling bonds in May and £40mln of Polish bonds due in June, with the next big focus being the €406mln Eurobond maturing in April 2021.
Chief executive Gerard Ryan said: “We have a resilient business and as restrictions ease further, I am confident that we will increase our volume of new lending and see a steady improvement in performance. It is clear that following the pandemic, the need for a principled and responsible institution that provides finance to underbanked and underserved consumers around the world will be more important than ever. We fully expect to fulfil that role.”
IPF shares shot up 12% to 70.3p on Wednesday morning.
"The loan book will be shrinking, thus impacting negatively on revenue generation," said analysts at Shore Capital, adding that ongoing uncertainty about the company's ability to refinance the April 2021 Eurobond "is the main reason we retain a 'hold' stance on the shares despite it trading on just 0.4x [tangible net asset value]".
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