Sterling weakness hits IFG profits

THE weakness of sterling against the euro wiped out a 12% underlying profit increase at financial services group, IFG, resulting in flat pre-tax profits of just over €9.9 million for the first half of this year.

Operating profit was also unmoved at €11m but revenue fell by €3.5m on the same period last year to €58m. Earnings per share for the first six months rose from 9.13c to 9.34c. The interim dividend per share rose by 10%, year-on-year, to 1.27c.

Despite the largely uneventful results, IFG chief executive, Mark Bourke said he and the rest of the group’s management were confident that the business could continue to perform well, despite the current tough trading conditions.

“We believe that our strong management, cash flow and balance sheet will enable us to continue to deliver, even in these difficult markets. The group has performed well in difficult market conditions and this reflects our focus on robust business models which emphasise the benefit of repeat income streams. The underlying rate of profit growth for the half year was 12%, which was off-set by the movement in sterling.”

The volume of mortgage and title insurance selling dropped throughout this year, to date. IFG is now projecting a 40% decrease in volume, at least, in prime lending and a 60% drop in re-mortgaging for this year as a whole.

“Our response to the resulting market change is to use technology to reduce processing costs, to re-invent the broking model, capture significant broker market share and to build profitable distribution going forward,” added Mr Bourke.

IFG is considering potential further acquisitions, which could include bolstering its Irish division. In June, the company paid €25m for Cyprus-based specialist corporate services company, Excel Serve Management.

Further growth is likely to come via its Irish-based pensions and investments arm.