International Personal Finance plc

Good morning, everyone, and thank you for joining us for the International Personal Finance third quarter 2024 trading update. My name's Lydia and I'll be your operator today. After the prayer remarks, there'll be an opportunity for you to ask questions. To join the questions queue, please press star followed by one on your telephone keypad. I'll now hand you over to Gerard Ryan, CEO, to begin. Please go ahead.

Thank you, Lydia, and good morning, everyone, and welcome to our Q3 trading update call. Now, today I'm joined by Gary Thompson, our CFO, and together we'll take you through the highlights of our third quarter performance. As usual, as Lydia has just said, there'll be plenty of time at the end of the briefing for us to answer any questions you might have. Now, I assume most of you will have had a chance to read our trading statement today, and if so, you'll have noticed that it's slightly shorter than our previous quarterly updates. I just wanted to explain why that is the case. After listening to pretty consistent feedback from analysts and investors and reviewing other similar statements, we found that our quarterly updates were far more detailed than basket best practice, and so we made a change to a shorter and more high-level update. We will, of course, continue to report on our divisions in detail in our full year and interim results, but for quarters one and three, we'll move forward with the new, briefer updates. So with that, moving on now to Q3, I'm very happy to report that the second half of this year started on a very strong note. We delivered another strong financial performance in the quarter, building on the momentum of the first half, and we're on course to deliver full-year results in line with our guidance announced with our half-year results in July. However, for us as a team, one of the key highlights of the quarter is the fantastic milestone we reached of serving 15 million customers since we first began operations in 1997. Helping so many people who often struggle to access credit reflects on what IPF is all about. And I'd like to take this opportunity to thank all of my colleagues, both past and present, who have dedicated their work to increasing financial inclusion and making such a positive impact on the people and communities we serve. Turning now to lending, we continue to see strong demand for affordable credit from underserved consumers. And we're meeting this demand with the broad range of credit products and insurance services we now offer. From a single product company at our launch some 26 years ago, not only do we still offer weekly home credit loans, but now more and more digitized. We also offer a credit card in Poland, fully remote digital credit and mobile wallet, retail store credit in Romania, and a range of value-added services, including healthcare and life insurances. As a result of this demand, and excluding Poland, where as many of you know, we're adapting our business to pricing and affordability requirements, we delivered a 7% year-on-year increase in customer lending and 2% growth in customer numbers in Q3. I'm pleased to report that after a period of transitioning to a more credit card-focused operation, our Polish business returned to growth and delivered an increase in lending of 4% year-on-year. also progressing our strategy to regrow the business and i'm pleased to report that group net receivables now stands at 842 million at the end of quarter three showing 11 percent growth excluding poland and their constant exchange rates poland receivables have now stabilized at 180 million broadly in line with the size of the portfolio at the time of our interim results driven by our team's focus on responsible lending and strong operational execution I can confirm once again that customer repayment performance has been excellent in all our markets, a trend we have seen for some time now. This has helped deliver a further 2.8 percentage point improvement in our annualized impairment rate to 9.2%, so it's well below our target of 13% to 16%. And with such excellent quality across the group, this sets us up well for further growth in the quarter 4 and beyond. Now, our annualized yields, so that's the revenue yield, reduced by 0.3 percentage points to 55.1% since the interim results, and the group's annualized cost-income ratio increased by 1.1 percentage points, and both of these are due to the expected reduction in the revenue yield in our Polish business. Excluding Poland, the group's annualized revenue yield jumps to 57.6%, so that's well within our target range of 56 to 58%. and our annualized cost accumulation was 55.1%, so that compares to our target of 49 to 51, so plenty of room for improvement on that one. Moving now to our balance sheet and funding, both of which remain strong and well-positioned to support our growth ambitions and progressive dividend policy. Our equity-to-receivables ratio stood at 53% at the end of the third quarter, so that's down from 50%. This movement reflects the successful completion earlier this month of our 15 million pound share buyback program, as well as the recent depreciation in the Mexican peso. At the end of Q3, we had funding headroom on undrawn facilities and non-operational cash balances of 151 million. And I'm pleased to share with you that we continue to progress our funding strategy, successfully securing 40 million of bank facilities in the quarter. Well, it is a brief statement this time, so that brings me to the end of our Q3 review. And before we check in with any questions, just a very brief recap. We delivered a strong financial performance driven by good customer demand, excellent credit quality, and the successful execution of our next-gen strategy. We also returned to customer lending growth in Poland, and the granting of a full payment institution license, which we expect shortly, we'll enable our Polish home credit business to issue a greater volume of credit in the future. We successfully executed our share buyback program whilst maintaining a very strong balance sheet. And with the progress we're making across our strategic priorities, we're happy to reaffirm our full year results guidance for 2024. So as I said, brief, but hopefully you get all the information you need there. And with that, I'll hand you back to Lydia so we can cover any questions that you might have at this stage. Lydia. Yeah.

Thank you, Gerard. Again, it's star followed by the number one if you'd like to ask a question. And please ensure your device is unmuted locally when it's your turn to speak. To remove yourself from the queue, it's star followed by two. And if you joined us online, you can submit written questions in the text box. Our first question today comes from Gary Greenwood with Shaw Capital. Please go ahead, Gary. Your line is open.