(Adds comments from CEO & analysts, details, share movement)
By Abhiram Nandakumar
July 30 Consumer credit provider International
Personal Finance Plc said it was expanding into Spain,
where it may take longer to break even than its eastern European
Shares of the FTSE-250 company, which provides small
personal loans in eastern Europe and Mexico, fell as much as 3.9
percent on Wednesday to 563 pence on the London Stock Exchange.
"Due to the nature of the market and the potential scale of
opportunity, Spain's development will require both a higher
level of investment and a longer period to break even compared
to our recent new markets of Lithuania and Bulgaria," the
company said in a statement.
The Spanish expansion, while positive, is likely to cause
consensus downgrades until the country starts contributing to
IPF's profit, RBC Capital Markets analysts said.
Chief Executive Gerard Ryan said he expected the first loan
in Spain to be issued early in 2015 and to build a portfolio of
about 400,000 customers or more at maturity, which could take
five to eight years.
Numis Securities analysts said in a note that they expect
Spain could contribute over 24 million pounds at maturity.
"We believe there isn't a strong competitor, if any, for us
there (Spain)," Ryan told Reuters on phone, adding that there
was strong consumer interest in borrowing small sums.
The company, which provides small loans to 2.6 million
borrowers in eastern Europe and Mexico, expects to invest about
11 million pounds in Spain through 2015 and anticipates to break
even in 2018.
IPF services customers with questionable or no bank records
through its 30,000 agents. The company delivers cash and
collects repayments on some loans at borrowers' doorsteps.
IPF reported a 55 percent fall in pretax profit at 24.5
million pounds, hurt by a one-time loss, investment costs and
weaker foreign exchange rates.
The company said it booked a loss of 22.6 million pounds
related to the repurchase of existing eurobonds, which was about
2.6 million pounds more than analysts expected.
Pretax profit before exceptional items was 47.1 million
pounds for the six months ended June 30, up 11 percent from a
The company, which raised its interim dividend to 4.2 pence
per share from 3.8 pence, reported a 17 percent rise in revenue
at 394.1 million pounds.
($1 = 0.5906 British Pounds)
(Reporting by Abhiram Nandakumar and Richa Naidu in Bangalore;
Editing by Gopakumar Warrier and Robin Paxton)