Earnings call transcript: International Personal Finance sees growth in Q3 2025

International Personal Finance (IPF) reported its third-quarter earnings for 2025, showcasing significant growth in customer lending and digital business expansion. Despite a 4.22% decline in stock price following the earnings release, the company remains optimistic about its strategic initiatives and future outlook. According to InvestingPro data, IPF has demonstrated strong momentum with a remarkable 63.17% return over the past six months, while maintaining a healthy financial position with a current ratio of 6.79.

Key Takeaways

• Group customer lending increased by 14% in Q3.
• Digital business in Mexico grew over 40% year-on-year.
• The stock price fell 4.22% following the earnings announcement.
• The company aims to improve its revenue yield to 56-58% in the medium term.

Company Performance

International Personal Finance demonstrated robust performance in Q3 2025, with a 14% increase in group customer lending and a 12% rise year-to-date. The company's digital platforms in Mexico and Australia showed substantial growth, contributing significantly to its overall performance. The expansion of product offerings, including new short-term loans and credit cards, particularly in Poland, underscores IPF's strategic focus on innovation and market penetration.

Financial Highlights

• Net receivables: Exceeded £1 billion, a 14% year-on-year increase.
• Annualized impairment rate: Increased from 8.3% to 9.8%.
• Cost-to-income ratio: Improved to 61.4%.

Outlook & Guidance

IPF is on track to meet its full-year results in line with its half-year guidance. The company is targeting an impairment range of 14-16% over the next two years and aims to enhance its revenue yield to between 56% and 58%. The medium-term goal is to achieve a cost-to-income ratio of 49-51%. The outlook for 2026 remains positive, with a focus on expanding in key markets such as Mexico, Australia, and digital platforms.

Executive Commentary

"Our next-gen strategy continues to deliver tangible results across all of our markets," stated Gerard Ryan, CEO. He emphasized the company's strong growth momentum and robust funding position as they enter the final quarter of the year. Ryan also highlighted the company's ability to maintain high credit quality while positioning itself for accelerated growth.

Risks and Challenges

• Rising impairment rates could impact profitability.
• Intense competition in digital lending markets.
• Economic uncertainties in key markets like Mexico and Australia.
• Potential regulatory changes affecting lending practices.
• Dependence on technological advancements for digital growth.

International Personal Finance's Q3 2025 performance reflects a successful execution of its strategic initiatives, despite the immediate market reaction. The company remains committed to growth and innovation, focusing on expanding its digital footprint and enhancing customer experience across its markets. With a robust Altman Z-Score of 10.75 indicating strong financial health, IPF continues to maintain a solid foundation for future growth.

Full transcript - International Personal Finance PLC (IPF) Q3 2025:

Drew, Call Host/Moderator: Good morning and welcome to IPF's Q3 trading update call hosted by CEO Gerard Ryan and CFO Gary Thompson. During today's call, we will have a Q&A session. If you would like to register a question, please press followed by 1 on your telephone keypad. To withdraw your question, it's followed by 2. Alternatively, if you have joined us online, please click the Q&A button and type in your question. I'll now hand over to Gerard, who will take you through today's briefing.

Gerard Ryan, CEO, IPF: Good morning and thank you very much, Drew. Good morning everyone, and thank you for joining us for our Q3 trading update call this morning. I'm here with Gary, our CFO, and together we'll take you through another strong quarter for our group, highlighting our financial performance, focus on our next-gen strategy, and our outlook as we head into the final quarter of 2025. As Drew said, we'll have plenty of time at the end for Q&A, as always. In addition to today's Q3 trading update, you'll also have seen an update to the market regarding the possible offer for IPA, for which a further 28-day extension has been approved. As you know, under the takeover rules, that is as much as I can say about that matter. We'll turn now to the Q3 trading updates.

If you've had a chance to read the updates, you'll have seen that we delivered another excellent quarter of growth and a strong financial performance. Our next-gen strategy continues to deliver tangible results across all of our markets. We saw continued robust demand for our products, with group customer lending accelerating to 14% in the third quarter and 12% for the year to date. That is a great indicator of the momentum across all of our businesses. Looking at our divisional performance on lending, we've seen particularly strong results from our digital businesses in Mexico and Australia, which continue to be the clear standards in terms of growth. Both are scaling up very nicely at this point.

In Mexico, our digital business grew at more than 40% year-on-year and is gaining real traction as awareness of our Creditea brands builds and more new customers take up our short-term lending product, which is proving to be a very popular acquisition offering for us. In Australia, we're investing in our Credit24 brand to significantly raise our profile, and we've recently launched a new TV campaign to further raise awareness of our products. Year-on-year, customer lending in this market has increased by 25%. In our European home credit operations, Romania and Poland also delivered robust double-digit growth. Poland continues to perform well, and credit cards are now making a meaningful contribution to lending, with over 50,000 new cards issued so far this year and 196,000 active card customers on our books at the end of the quarter.

I also want to call out the continued strengthening of our Mexico home credit business, where Q3 lending increased by 11% year-on-year compared to 1.6% in the first half of this year. We're encouraged by this momentum and expect a positive trajectory to continue through Q4. Turning now to customer growth, I'm very pleased to report that our total customer numbers returned to growth, increasing by 2.3% year-on-year to 1.7 million. We attracted more than 40,000 new customers in the third quarter alone, driven largely by the strong take-up of our new short-term loan products in Mexico and Poland, together with continued growth in our home credit and digital businesses in Mexico. Net receivables now exceed £1 billion, an increase of 14% year-on-year. This reflects the strong lending we've delivered across all divisions, and we see this growth continuing through all of the fourth quarter.

Customer repayment behavior remains excellent across all our markets, and credit quality continues to be strong. As expected, with faster lending growth, our annualized impairment rate increased from 8.3% to 9.8% in Q3. Impairment will gradually move towards our target range of 14% to 16% over the next two years as lending volumes continue to increase, particularly in our new product lines. The annualized revenue yield remained broadly stable at 53%, with the impact from the Polish rate cap and Mexico mix effects now behind us. We expect the yield to increase over time towards our target range of 56% to 58% as we transition to higher-yielding products such as credit cards, but also as new customers in Mexico make up a greater share of our overall portfolio. We're continuing to focus on driving efficiency across the group, and our annualized cost-to-income ratio improved modestly to 61.4%.

We expect further progress towards our medium-term target of 49% to 51% as scale efficiencies come through the business. As part of our next-gen tech and data strategy, we're also developing new ways to use AI to deliver real value to our business by automating processes and improving the customer experience and onboarding journey. We'll talk more about this with our full-year results. Now, moving on to our funding position and balance sheet, both of which remain very strong. We ended Q3 with £83 million of headroom and an equity-to-receivables ratio of 52%, so considerably above our 40% target. Our treasury team has successfully secured £141 million of bank facilities so far this year, including £58 million in Q3 alone. We continue to see good investor appetite for our bonds, which positions us well for a return to the debt capital markets as and when required.

Now, before we move to questions, I'll wrap up today's update with our outlook. We've entered the final quarter of the year with strong growth momentum, excellent credit quality, and a robust funding position. Our next-gen strategy is clearly working, and we remain on track to deliver full-year results in line with our half-year guidance. Looking ahead to 2026, we see good opportunities to reinvest our success into further expansion, particularly in Mexico, Australia, and our new digital products and platforms. That brings me to the end of today's briefing. In summary, Q3 was another excellent quarter. We're growing strongly, maintaining high credit quality, and we're well-positioned to accelerate growth as we go forward. All of the details from today's trading update are available on our website at www.ipfin.co.uk, so I-P-F-I-N dot co.uk. A recording of this call will be uploaded later on today.

With that now, let me hand you back to Drew, and we'll see if we've had any questions come in while I've been chatting to you.

Drew, Call Host/Moderator: Thank you. If you'd like to ask a question on today's call, please press followed by 1 on your telephone keypad. To withdraw your question, it's followed by 2. If you've joined us online, please click the Q&A button and type in your question. We'll pause for just a moment to see what questions we have come in. As a reminder, that is followed by 1 on your telephone keypad. If you've joined us online, please click the Q&A button and type in your question.

Gerard Ryan, CEO, IPF: Okay, Drew, I think we'll leave it at that. I'm not really surprised that there aren't any questions because, in truth, it's been a very straightforward quarter. We've delivered exactly what we said. Growth is accelerating, credit quality is very good, the funding position is strong, and the equity side of the balance sheet, as always, is particularly strong. We feel good as we head into the final three months of the year, and the momentum I've talked about, we already see coming through as we're nearly towards the end of October. Generally positive all around for us. With that, I'll sign off. Thank you very much, everyone, for joining us this morning. Thank you, Drew, for hosting the call.

Drew, Call Host/Moderator: Thank you. That concludes today's call. You may now disconnect your line.

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