March 1, 2018 / 7:58 AM / 17 days ago

IPF gears up for tougher lending rules across Europe

(Reuters) - International Personal Finance Plc (IPF) (IPF.L) said on Thursday it expected caps on loan charges to be put in place in Czech Republic, Romania and Spain, as it deals with regulatory oversight of its consumer credit markets.

IPF, which provides small personal loans, also reported a rise in pretax profit from continuing operations to 105.6 million pounds ($145.27 million) in 2017, from 96 million pounds a year earlier.

Loans issued by the company rose 6 percent to 1.30 billion pounds, driven by strong perfomances at its Mexico home credit business in the first half of the year as well as its digital arm.

However, earthquakes in Mexico last year, hurt IPF’s business in the country in the second half of the year.

IPF shares were up 4.7 percent at 198.2 pence at 1233 GMT.

“There are three countries in Europe that we trade in where we don’t have rate caps, that is the Czech Republic, Spain and Romania, and I would expect over time that all of those will have some sort of cap,” Chief Executive Officer Gerard Ryan told Reuters.

“As long as these caps are set at a reasonable level we tend to operate very effectively within that.”

Ryan said that IPF Digital had experienced strong growth in Poland and Spain, its new markets, in 2017.

    IPF has been engaging with the Polish government over the country’s proposal to reduce the existing cap on loan charges.

    “I guess the big overhang in terms of regulatory is in Poland ... In the 15 months, absolutely nothing has changed and the bill hasn’t even been presented to Parliament,” Ryan said.

    The company said more stringent creditworthiness assessments introduced in Romania last year were likely to reduce the volume of loans it was allowed to provide to customers in that country.

    The consumer credit lender said it expected its digital arm to continue to grow strongly, however it backed away from its target of the unit delivering its maiden profit in 2018 citing new accounting rules.

    (This version of the story corrects to add unit name IPF Digital in paragraph 8.)

    Reporting by Noor Zainab Hussain and Esha Vaish in Bengaluru; Editing by Gopakumar Warrier and Shounak Dasgupta

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