Slides
Page 1
2024 full-year results Accelerating the pace of growth and change 26 February 2025 1
Page 2
Performance and strategy Gerard Ryan Chief Executive Officer
Page 3
A very strong full-year performance 15.7% 11.4p Dividend per share 54% £85.2m Pre-exceptional profit before tax Equity to receivables +11% +1.5% Financial results ahead of guidance Exceptional execution driving growth momentum Increased returns to shareholders Strong balance sheet to accelerate growth Next Gen strategy underpinning performance £15m shares bought back in 2024; intend to commence further buyback programme Return on required equity 3
Page 4
Since 1997, we have helped 15m customers gain access to essential financial services
Page 5
Making progress on our Next Gen strategic priorities Financial inclusion Organisation Technology and data Building the products, channels and territories to ensure our propositions are attractive to the next generation of customers Becoming a more efficient organisation that makes a positive impact on society Becoming a data driven and technology-enabled partner for our customers 5
Page 6
Next Gen financial inclusion • 150,000 credit card customers in Poland - new licence will accelerate growth • New branch in Mexico and attracting customers in new regions • Expanded point of purchase finance in Romania - 700 partners • Launched retail distribution channel in Mexico – 50 partners • Building digital lending offering in Romania • Strong growth in mobile wallet users to 115,000+ consumers 6
Page 7
Next Gen organisation 7 • Field transformation in European home credit to deliver process efficiency and develop talent • Single leadership structure in place for European home credit to drive commonality of process and systems • Expansion of credit card product will leverage Polish leadership and systems • Almost £1m invested in global community programmes • Focus on industry awards to demonstrate that we do the right thing
Page 8
Next Gen tech and data • Meeting customer expectations - new customer app in Mexico has 360,000 downloads • High engagement with ProviGo customer app in Poland – 55% penetration and 1.3m+ log-ons per month • Transforming customer experience in European home credit with omnichannel service • Integrating AI and data for faster communication and lead generation 8
Page 9
Financial performance Gary Thompson Chief Financial Officer
Page 10
• Pre-exceptional profit before tax of £85m, ahead of interim guidance, despite £5m FX headwind • Continued financial progress underpinned by: - Outstanding customer repayment behaviour - Excellent operational execution - Rigorous application of our financial model • As expected profit in H2 lower than H1: - Repricing of credit cards - Stronger lending growth - Impact of weaker Mexican peso and Hungarian forint • Exceptional costs of £11.9m, primarily in H1: - £6.1m European home credit restructuring - £5.8m Eurobond refinancing £77.4m £83.9m £85.2m1 2023 20242022 1.5% Strong financial performance 1. Before pre-tax exceptional costs of £11.9m 2. Constant exchange rates 10 Pre-exceptional profit before tax CAGR = 5% 2024 2023 Change Change at CER2 H1 47.3 37.8 25.1% 26.1% H2 37.9 46.1 (17.8%) (8.7%) FY 85.21 83.9 1.5% 7.8%
Page 11
1. All growth rates are at constant exchange rates • Group customer lending up 9% • European home credit: - Romania, Hungary and Czech Republic combined delivered 12% growth - Growth accelerated through 2024 increasing from 8% in H1 to 17% in H2 - Poland recovered from a contraction of 5% in H1 to 36% growth in H2 (13.0% overall) • Mexico home credit: - Strong demand but growth impacted temporarily by IT upgrade in Q4 (-8% in Q4) - Returned to YoY growth in early 2025 - Expect growth of 10%+ in 2025 • IPF Digital: - Strong growth of 10% - Excellent performances from Mexico and Australia delivering 20%+ growth with Baltic markets up 3% - Poland delivered 20% growth in H2 following a reduction of 18% in H1 (-2% overall) Robust demand driving customer lending growth 13% £627m £602m £662m European home credit 1 2023 20242022 £1,126m £1,151m £1,215m 2023 20242022 Group 1 9% £242m £246m £263m 2023 20242022 IPF Digital 1 10% £257m £303m £289m 2023 20242022 1% Mexico home credit 1 11
Page 12
Accelerating receivables growth £214m £230m £251m 2023 20242022 IPF Digital 1 18% 3% £496m £475m £460m European home credit 1 2023 20242022 £158m £187m £159m 2023 20242022 3% Mexico home credit 1 • Acceleration in Group receivables growth of 7% (0% at June 2024) • European home credit: - 13% increase in Romania, Hungary and the Czech Republic - Reduction of 13% in Poland but increased lending volumes led to 6% growth in Q4 - Expect growth of 15%+ for 2025 • Mexico home credit: - Modest growth of 3% due to disruption in Q4 - Expecting faster growth of c.15% in 2025 • IPF Digital: - Standout performers: Mexico, Australia and Czech Republic each delivering 26%+ growth - Baltic markets up 13% - Poland delivered YoY growth of 3% with 6% growth being delivered in Q4 - Expect similar receivables growth in 2025 £869m £893m £870m 2023 20242022 Group 1 7% 1. All growth rates are at constant exchange rates 12
Page 13
• Group yield decreased modestly from 55.3% to 54.7% - ex-Poland stable at 57.3% • EHC yield of 46.5% - modest YoY reduction of 1ppt due to credit card repricing • Mexico home credit yield moderated from 87.4% to 85.9% due to increased proportion of lending to existing customers • IPF Digital reduced by 1 ppt to 42.7%, reflecting existing rate cap changes in Europe • Strict focus on efficiency and cost control • Increase in cost-income ratio due wholly to revenue reduction in Poland - ex-Poland in line with 2023 at 55.4% • Investing in growth and capability to accelerate change across the Group • Committed to delivering target of 49% to 51% in the medium term Progressing against medium-term targets 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 14% Impairment rate 16% 9.6% Target range 45% 47% 49% 51% 53% 55% 57% 59% Revenue yield 54.7% 58% 56% Target range 61.0% 13 • Strong customer repayments and excellent credit quality continues • Group impairment rate improved from 12.2% to 9.6% with all three divisions improving their performance • Cost-of-living provision reduced by £6m (£5m in 2023) • Improved credit quality led to a reduction in impairment provision coverage ratio to 32.9% 1. Before exceptional restructuring costs of £6.1m Ex. Poland H1-22 FY-22 H1-23 FY-23 FY-24H1-24 40% 45% 50% 55% 60% 65% 70% 51% Cost-income ratio1 Target range 49% H1-22 FY-22 H1-23 FY-23 FY-24H1-24 H1-22 FY-22 H1-23 FY-23 FY-24H1-24 Ex. Poland
Page 14
Strong growth in returns, earnings and dividends 10.7% Return on required equity (RoRE)1 Dividend per share (DPS) • Improved RoRE due to improved returns in IPF Digital • Returns expected to moderate in 2025 due to strong receivables growth • Pre-exceptional RoE improved to 11.5% (2023: 11.1%) • Proposed final dividend of 8.0p per share, up 11.1% - total dividend of 11.4p, up 10.7% • Reflects continued strong performance and strategy to realise the long-term growth potential • Pre-exceptional payout ratio of 46%, above minimum level of 40% • Dividend and payout rate consistent with progressive policy 9.2p 10.3p Pre-exceptional earnings per share (EPS)1 7.3% 20.8p 23.2p 24.9p 11.4p • 7.3% growth in pre-exceptional EPS compared with 1.5% growth in pre- exceptional PBT • Effective tax rate of 35% (2023: 38%) – expect future years to be c.38% (previous expectations were 40%) • Reported EPS of 27.3p, up 27.0%, includes benefit of £15.2m exceptional tax credit relating to State Aid 20232022 2024 20232022 2024 H1-23H1-22 H1-24 0.9ppts 14.6% 14.8% 15.7% 20232022 2024 141. Before pre-tax exceptional costs of £11.9m and an exceptional tax credit of £17.4m
Page 15
• Nearly £400m funding secured in 2024 following successful refinancing of the Eurobond • Rating upgrade from BB- to BB from Fitch Ratings • Secured £103m of bank facilities of which £37m was new or increased facilities – a further £20m in 2025 • Significant headroom on funding facilities through to the end of 2025 • £490m of facilities now maturing beyond 2025 • Reduced funding cost of 13.3% (2023: 14.0%) - expect rate to be broadly stable in 2025£138m headroom 1 £400m funding secured in 2024 1. Undrawn facilities and non-operational cash balances. £657m total debt facilities £441m bonds £216m banks Robust funding position following successful refinancing £20m secured in 2025 15
Page 16
Strong capital position supports further £15m share buyback 16 RoRE * Supports minimum dividend payout ratio of 40% Funds receivables growth of up to 10% p.a Maintains equity to receivables ratio at 40% 15% - 20% *Required equity = equity to receivables ratio of 40% • Equity to receivables reduced from 56% to 54%: - £57m of foreign exchange losses taken to reserves - Successful completion of £15m share buyback in 2024 • Strong capital position supports: - Further £15m share buyback programme - Ambitious growth plans - Progressive dividend policy • Expect to deliver target returns and operate in line with our financial model in 2027 Our financial model
Page 17
Outlook Gerard Ryan Chief Executive Officer
Page 18
Accelerating the pace of growth Accelerating the pace of change Credit cards Expanding retail partnerships Digital offerings Poland recovery Mexico expansion and product diversification IPF Digital opportunities in Australia and Mexico Delivering our growth vision Xenia omnichannel touchpoints Customer apps Transformation office Credit card platform AI / robotics 18
Page 19
20 Focused on delivering growth and returns Accelerating the pace of growth and change 19
Page 20
Questions
Page 21
Appendices
Page 22
2024 £m 2023 £m Change £m Change % Change at CER % Customer numbers (000s) 1,652 1,700 (48) (2.8) Customer lending 1,214.5 1,150.6 63.9 5.6 9.2 Average gross receivables 1,327.5 1,388.9 (61.4) (4.4) (1.6) Closing net receivables 870.0 892.9 (22.9) (2.6) 6.8 Revenue 726.3 767.8 (41.5) (5.4) (2.1) Impairment (127.5) (169.4) 41.9 24.7 21.1 Revenue less impairment 598.8 598.4 0.4 0.1 3.2 Costs (443.2) (437.6) (5.6) (1.3) (4.0) Interest expense (70.4) (76.9) 6.5 8.5 6.0 Pre-exceptional profit before taxation 85.2 83.9 1.3 1.5 Exceptional items (11.9) - (11.9) (100.0) Profit before taxation 73.3 83.9 (10.6) (12.6) Revenue yield 54.7% 55.3% (0.6) ppts Impairment rate 9.6% 12.2% 2.6 ppts Cost-income ratio 61.0% 57.0% (4.0) ppts Pre-exceptional EPS1 24.9p 23.2p 7.3% Pre-exceptional RoE1 11.5% 11.1% 0.4 ppt Pre-exceptional RoRE1,2 15.7% 14.8% 0.9 ppts 1 Prior to a pre-tax exceptional charge of £11.9m in 2024, and an exceptional tax credit of £17.4m in 2024 and an exceptional tax charge of £4.0m in 2023. 2 Based on required equity to receivables of 40%. Group
Page 23
2024 £m 2023 £m Change £m Change % Change at CER % Customer numbers (000s) 725 754 (29) (3.8) Customer lending 662.1 601.7 60.4 10.0 12.6 Average gross receivables 706.0 791.1 (85.1) (10.8) (8.9) Closing net receivables 459.6 475.4 (15.8) (3.3) 3.0 Revenue 328.2 375.9 (47.7) (12.7) (11.0) Impairment (8.1) (35.6) 27.5 77.2 77.1 Revenue less impairment 320.1 340.3 (20.2) (5.9) (4.0) Costs (225.1) (225.2) 0.1 - (1.6) Interest expense (37.6) (47.4) 9.8 20.7 19.1 Pre-exceptional profit before taxation1 57.4 67.7 (10.3) (15.2) Revenue yield 46.5% 47.5% (1.0) ppts Impairment rate 1.1% 4.5% 3.4 ppts Cost-income ratio 68.6% 59.9% (8.7) ppts Pre-exceptional RoRE1,2 19.9% 21.6% (1.7) ppts European home credit 1 Prior to a pre-tax exceptional charge of £6.1m and, in respect of RoRE, an exceptional tax credit of £1.1m in 2024, and an exceptional tax charge of £4.0m in 2023. 2 Based on required equity to receivables of 40%.
Page 24
2024 £m 2023 £m Change £m Change % Change at CER % Customer numbers (000s) 680 716 (36) (5.0) Customer lending 289.2 302.8 (13.6) (4.5) 1.4 Average gross receivables 306.9 299.4 7.5 2.5 8.5 Closing net receivables 159.4 187.1 (27.7) (14.8) 3.0 Revenue 263.8 261.6 2.2 0.8 7.1 Impairment (92.4) (96.7) 4.3 4.4 (2.0) Revenue less impairment 171.4 164.9 6.5 3.9 10.0 Costs (131.0) (129.7) (1.3) (1.0) (6.3) Interest expense (14.4) (12.1) (2.3) (19.0) (26.3) Reported profit before taxation 26.0 23.1 2.9 12.6 Revenue yield 85.9% 87.4% (1.5) ppts Impairment rate 30.1% 32.3% 2.2 ppts Cost-income ratio 49.6% 49.6% - ppts RoRE1 24.4% 20.7% 3.7 ppts Mexico home credit 1 Based on required equity to receivables of 40%.
Page 25
IPF Digital 2024 £m 2023 £m Change £m Change % Change at CER % Customer numbers (000s) 247 230 17 7.4 Customer lending 263.2 246.1 17.1 6.9 9.9 Average gross receivables 314.6 298.4 16.2 5.4 8.1 Closing net receivables 251.0 230.4 20.6 8.9 17.6 Revenue 134.3 130.3 4.0 3.1 6.1 Impairment (27.0) (37.1) 10.1 27.2 24.2 Revenue less impairment 107.3 93.2 14.1 15.1 17.9 Costs (72.0) (67.8) (4.2) (6.2) (8.1) Interest expense (18.3) (17.3) (1.0) (5.8) (8.3) Reported profit before taxation 17.0 8.1 8.9 109.9 Revenue yield 42.7% 43.7% (1.0) ppts Impairment rate 8.6% 12.4% 3.8 ppts Cost-income ratio 53.6% 52.0% (1.6) ppts RoRE1 11.4% 5.6% 5.8 ppts 1 Based on required equity to receivables of 40%.
Page 26
2024 2023 Receivables (£m) 870.0 892.9 Equity (£m) 466.3 501.9 Equity to receivables 53.6% 56.2% Gearing 1.1 times 1.0 times Interest cover 2.6 times 2.5 times Pre-exceptional EPS 24.9p 23.2p Pre-exceptional RoE 11.5% 11.1% Pre-exceptional RoRE 15.7% 14.8% Strong financial profile
Page 27
2024 £m 2023 £m Change at CER Goodwill 22.6 23.6 - Fixed assets 68.8 70.0 4.6% Receivables 870.0 892.9 6.8% Cash 27.6 42.5 (31.0)% Borrowings (515.9) (511.8) (9.1)% Other net liabilities (6.8) (15.3) 62.6% Equity 466.3 501.9 3.2% Balance sheet
Page 28
Closing rates Dec 2024 Average 2024 Closing rates Dec 2023 Average 2023 Polish zloty 5.2 5.1 5.0 5.2 Czech crown 30.4 29.6 28.5 27.9 Euro 1.2 1.2 1.2 1.1 Hungarian forint 496.9 466.9 441.3 437.3 Romanian leu 6.0 5.9 5.7 5.7 Mexican peso 26.0 23.0 21.5 21.9 Australian dollar 2.0 1.9 1.9 1.9 Exchange rates
Page 29
Contacts Krzysztof Adamski Group Treasurer Mobile: +48 600 400 394 Email: krzysztof.adamski@ipfdigital.com Building a better world through financial inclusion Rachel Moran Investor Relations Mobile: +44 7760 167637 Email: rachel.moran@ipfin.co.uk