8th Sep 2020 11:35
(Alliance News) - International Personal Finance PLC on Tuesday reported a loss for the first half of 2020, as the lender saw a sharp drop in customers resulting in lower issued credit.
Shares in the home credit lender were down 19% in London on Tuesday mid-morning at 60.60 pence each.
In the six months to June 30, IPF sunk to a pretax loss of GBP53.3 million compared to a GBP56.1 million profit a year before.
Revenue dropped 15% year on year to GBP362.2 million from GBP446.9 million. IPF upped its credit impairments in the first half to GBP182.2 million from GBP123.8 million a year before, with the majority coming from its European Home Credit business.
"In response to reduced collections, lower price caps and the risk of an economic downturn, we tightened credit settings significantly in March in order to protect credit quality and cash flow," IPF explained.
IPF ended the first half with 1.8 million customers, a 17% drop from the 2.2 million seen at the same point a year before.
As a result, IPF's credit issued plunged 42% to GBP378.2 million from GBP672.3 million.
"As lockdown restrictions were relaxed and collections effectiveness improved, we eased credit settings from June onwards remaining focused on our higher-quality customers who have strong credit quality characteristics," IPF added.
Average net receivables contracted by 8% year on year to GBP862.9 million, driven by a combination of restrictions on credit issued and higher impairment provisions.
Chief Executive Gerard Ryan said: "Covid-19 has created an extremely challenging trading environment but thanks to our loyal and dedicated teams we have adapted to continue serving our customers now and into the future.
"We have reviewed and redefined our medium-term strategy to ensure we emerge from this period in a strong competitive and financial position, enabling us to fulfil the significant demand for affordable credit in our markets and put in place firm foundations for a quick return to profitability and long-term growth."
Ryan said IPF's near-term financial objective is the refinancing of its 2021 eurobond.
IPF cancelled its interim dividend, compared to a 4.6 pence payout a year before, due to its trading performance and expectations for the second half.
"IPF has a history of consistently delivering good levels of profitability, returns and capital generation, and we have put in place firm foundations for a quick return to profitability and delivering long-term growth," the company asserted.
By Paul McGowan; [email protected]
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