International Personal Finance sees Q3 slowdown, but meets forecasts

Home-credit business International Personal Finance (IPF) saw a slowdown in profit growth in the third quarter as a result of higher spending and currency movements, but stronger underlying growth matched analysts' expectations.

IPF, which has customers across Eastern Europe and also Mexico, said reported pre-tax profit in the three months to 30 September rose 5% to £34m on the year before, down from the 11% growth seen in the first half.

Underlying profits grew by 21%, but that didn't include the £1.5m of additional investment in new markets and the £3.7m adverse impact from weaker foreign exchange rates.

Customer numbers were 5% higher than a year ago at 2.62m, driving a 12% increase in revenue to £194.4m.

Stronger growth in Poland, Hungary and Mexico was offset by a reduction in customer numbers and credit issued in the Czech and Slovakia businesses. Excluding Czech and Slovakia, customer growth would have been 6%.

"Overall, our business is performing well and we have delivered good [profit] growth despite weakness in Czech-Slovakia, where trading conditions proved challenging," said chief executive Gerard Ryan.

"I am confident that we are on track to deliver a good full-year performance in 2014 as a result of the strong performances of our other businesses."

The consensus estimate is for profit before tax of £124m for 2014, up from £118.1m in 2013.

Analysts at Shore Capital said that the underlying growth of 21% was "broadly in line with our expectations" as a deterioration in the Czech and Slovakian markets was offset by a better-than-expected performance in Poland.

While IPF management expects the company to meet profit forecasts this year, Shore said that "2015 estimates may drift down slightly to around £140m".

The stock had jumped in early deals on Wednesday, up 4.6% at 477.8p by 08:19.