UPDATE 2-Currency gains help boost UK lender IPF's profit

(Adds details, quotes, shares)

By Clara Ferreira-Marques

LONDON, July 23 (Reuters) - British lender International Personal Finance (IPF.L) posted a 39 percent rise in first-half profit on Wednesday, boosted by steady customer and loan growth and favourable exchange rates in its key markets. IPF, which offers small loans to consumers in central Europe, Romania and Mexico, said it made a pretax profit of 22.1 million pounds ($44.3 million), at the higher end of forecasts. It will pay an interim dividend of 2.3p, up 21.1 percent, as part of its policy of moving to a 25 percent payout ratio.

"Clearly there has been some currency advantage, but the underlying profit performance has been strong. This is a real business, not just currency tailwind," Chairman Christopher Rodrigues told Reuters in a telephone interview.

In its core central European markets, IPF's pre-tax profit climbed almost 38 percent, again ahead of forecasts. Underlying profit there in local currency rose just shy of 16 percent.

Its established central European businesses alone rose 47.8 percent, or more than 19 percent at constant exchange rates.

Shares in IPF rose on the news, climbing 1.8 percent by 0800 GMT to 287p, beating a 1.5 percent rise in the FTSE 350 index for general financial stocks .FTNMX8770.

"IPF remains one of the very few UK listed financial services businesses that we see delivering more than 20 percent underlying EPS growth," Numis analysts said in a morning note.

"While IPF is not the cheapest UK listed lender it is one of very few to offer growth."

IPF, which split from UK parent Provident Financial (PFG.L) last July, has said in the past that its funding model and target group of unbanked consumers are untouched by the current market turmoil and the threat of a global recession.

It said on Wednesday there were still "few signs" of trouble feeding into its core countries, adding it expected a strong second-half performance from its main central European markets, with Mexico on track to report a profit for 2009.

It said incomes for its target group continue to grow above inflation even in markets like Hungary and the Czech Republic.

Credit quality, another concern for mainstream lenders, has also remained stable, with annualised impairment at 21.9 percent of revenue. Rodrigues said this was due to lending policies, including increasing loan amounts progressively and remunerating agents mostly from collections to encourage prudent lending.

IPF has also been caught up in concerns over funding that have hit the broad financial sector. It said on Wednesday that it continued to make "good progress" on work to extend its facilities and diversify funding, and said it had headroom of 243.2 million pounds on its committed banking facilities and funding in place to support growth planned to spring 2010.

Finance director David Broadbent said IPF could consider getting a rating to eventually raise capital through a bond or private placement to broaden its funding.

The group is due to begin operating in Russia "in the coming weeks", likely to be followed by a move into Ukraine. (Reporting by Clara Ferreira-Marques; editing by Sue Thomas/Quentin Webb/Rory Channing)