27th Oct 2015 10:53
LONDON (Alliance News) - International Personal Finance PLC shares were lower on Tuesday morning after the company said it would take a hit from tax changes in Romania, a concern which offset growth in its home credit business in the third quarter and its affirmation that it will meet market expectations for the full year.
The home credit lender said that due to recent changes to tax legislation in Romania, it will amend its relationship with its agents to make them employees of the company. It expects additional costs to arise from taking the agents onto its books and said it will book a GBP3.0 million cost against this in 2015.
In Poland, changes to consumer finance law resulted in the company having to create alternative products to comply with new rules putting a cap on non-interest costs of consumer loan. IPF said Tuesday its appeal against a ruling handed down in December 2013 on how the company calculates the total cost of credit and annual percentage rates in the country will start in November.
Poland has been a thorn in IPF's side this year and continues to be. The new legislation capping non-interest costs will come into force on March 11, 2016 and apply to all loans issued after that date. IPF said it anticipates the profitability of the Polish business will be hit through 2016 and 2017 and said the total impact will be determined by a range of factors, including customer behaviour, the response of its competitors, and wider market dynamics, none of which it has any certainty about at this stage.
The lender said its pro-forma growth in credit issued in the quarter to the end of September was 8.0%. The pro-forma numbers assume MCB Finance, the digital consumer credit provider it bought in February, was part of the company in the comparable period in 2014.
On a pro-forma basis, IPF's home credit issued rose by 6.0%, while its digital business saw credit issued rise by 35%. Home credit customers grew 1.0% in the quarter, while digital customers were up 31%, giving total pro-forma customer growth of 2.0% in the period.
The group said it performed well in Mexico in the quarter, with a resilient performance in its European home credit business. It said it is on track to start lending in Spain through its digital arm by the end of the year.
IPF said it expects further strong growth in Mexico and its digital business in the final quarter and expects its results to be in line with market expectations, notwithstanding the challenges in the sluggish European market.
Shares in IPF were down 4.0% to 395.00 pence on Tuesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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