International Personal Finance (IPF) said it expects the new law to become effective in the coming weeks but will only impact new lending from that date
International Personal Finance PLC shares fell despite good potential news on a credit cap in Poland.
The provider of unsecured consumer lending issued credit at 65% of pre-Covid expectations in December, up from 61% the month before thanks to a progressive relaxation of credit settings to reduce loan book contraction.
After previously reporting that the Polish government had proposed to extend the temporarily reduced cap on non-interest costs of consumer credit from March 8, 2021 until the end of 2021, this week an amendment was approved to shorten the proposed extension until the end of June. This proposed law now awaits the signature of president Andrzej Duda.
IPF, which will provide an assessment of the potential impact of the extension on future lending and profitability in its full-year results in early March, said it expects the new law to become effective in the coming weeks but will only impact new lending from that date.
The shares fell 5% to 75.9p in early trading on Friday.
Broker Shore Capital said the Polish regulatory news was “slightly positive – or perhaps less negative is a better way of phrasing it”.
While collections effectiveness is robust, analysts noted that credit issuance remains well below pre-Covid expectations but they expect this to improve further into the New Year as credit settings are gradually relaxed in order to rebuild the business.
This makes sense given vaccine roll-out has now commenced in many markets, albeit Europe is still somewhat behind the UK in this respect, they noted.
On the Poland decision, the analysts said it presumably reflects positive vaccine developments: The temporary price cap is very onerous in our view and is currently restricting the group’s appetite to lend in Poland, which is its largest market. So, while this is still likely to delay the ramp-up in credit issuance in this market versus our current forecasts (which had not yet been updated to reflect the proposed extension), it is nonetheless a better outcome than feared.
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