(Adds CEO quote, background, share movement)
By Abhijith Ganapavaram
March 1 Consumer credit lender International
Personal Finance Plc's full-year pretax profit fell 20.2
percent, weighed down by intense competition from digital and
payday lenders in some key markets such as Poland and regulatory
changes that capped non-interest costs.
Shares of the company, which provides small personal loans
in eastern Europe and Mexico, fell as much as 12.3 percent,
making it the top percentage loser on the FTSE midcap index
"There has been a shrinkage in some of markets in Europe in
the home credit business," Chief Executive Gerard Ryan told
Home credit business accounted for more than 90 percent of
the company's total revenue in 2016.
Ryan said digital lenders were luring away IPF's higher
creditworthy customers, forcing the company to spend more to
Some European countries, such as Slovakia, have imposed a
cap on the fee and costs that lenders can charge from customers,
hurting profitability and making it difficult for IPF to serve
high-risk customers. The company shut down its operations in
Slovakia in 2016.
Lenders charge more money to higher risk customers than
those with better credit rating.
Poland, which together with Lithuania makes up IPF's biggest
market, has also proposed to lower the limit on non-interest
costs to 75 percent of the amount of the loan from 100 percent.
The company said it decided to cease lending to high risk
customers in Poland in the fourth quarter.
"We expect the competitive and regulatory environment to
remain challenging," Ryan said.
IPF's profit before tax dropped to 92.6 million pounds
($114.49 million) in 2016 from 116.1 million pounds a year
earlier, partly hit by investments in its digital platform.
Revenue rose 1.2 percent to 755.9 million pounds, but number
of customers fell 1.6 percent to 2.5 million, the first such
drop in seven years.
The company's shares were trading down 11.2 percent at
160.61 pence by 1015 GMT.
($1 = 0.8088 pounds)
(Reporting by Abhijith Ganapavaram in Bengaluru; Editing by