How Do IPF Make Money?
IPF generates revenue primarily through interest on the loans and credit it extends to its customers. With a focus on financial inclusion, IPF targets markets where access to credit is limited, thereby meeting a crucial need and creating a loyal customer base. They also offer insurance products, adding another revenue stream and enhancing customer value.
Strong Financial Performance and Shareholder Value
IPF has recently reported impressive first-half results for 2024, showcasing a pre-exceptional profit before tax of £47.3 million, marking a 25% increase from the same period in 2023. This strong performance has led the company to upgrade its full-year profit expectations to between £78 million and £82 million. Notably, this growth is driven by robust customer repayment performance and a reduced impairment rate of 10.5%.
To further enhance shareholder value, IPF has launched a £15 million share buyback program. This initiative aims to increase capital efficiency and reduce share capital, supported by their solid balance sheet with an equity-to-receivables ratio of 56%. Additionally, IPF has increased its interim dividend by 9.7% to 3.4p per share, reflecting its progressive dividend policy.
Strategic Growth and Future Prospects
IPF's Next Gen strategy is a key driver of its growth. The company has expanded its operations in Mexico, issued over 180,000 credit cards in Poland, and significantly grown its digital mobile wallet user base by over 50%. Despite challenges in Poland due to regulatory changes, IPF has managed to stabilise its portfolio and expects to return to growth in this market.
The company's ability to adapt and innovate is evident in its successful refinancing of a €341 million eurobond, extending its debt maturity to 2029, and receiving a credit rating upgrade from Fitch to BB. This strong funding position enables IPF to support its ambitious growth plans, ensuring a stable financial foundation for future expansion.
Why Invest in IPF Now?
Robust Financial Health:
With a strong balance sheet, solid profit growth, and a strategic share buyback program, IPF demonstrates financial stability and a commitment to enhancing shareholder value.
Growth Potential:
IPF's expansion in Mexico, growing digital services, and successful adaptation to regulatory changes in Poland position the company for sustained growth.
Attractive Dividends:
The increased interim dividend (6.73%) reflects the company's confidence in its financial health and commitment to rewarding its shareholders.
Market Demand:
There is a substantial demand for IPF's credit and insurance services among underserved consumers, providing a stable and expanding customer base.
Strategic Vision: IPF's Next Gen strategy focuses on long-term growth opportunities, ensuring the company remains at the forefront of financial inclusion.
Conclusion
International Personal Finance plc stands out as a strong investment opportunity with its impressive financial performance, strategic growth initiatives, and commitment to shareholder value. We will be adding it to our portfolio on Monday.
