Fri | Sep 22, 2017

Microlender ISP bullish on new business despite competition

Published:Wednesday | April 5, 2017 | 4:00 AMSteven Jackson

ISP Finance Services Limited, a microlender that now turns over $230 million annually, is expecting to score new business fuelled in part by consumer and business confidence, and grow its top line.

But that is as far as CEO Dennis Smith would go in spelling out the company's outlook.

ISP buttressed its capital structure last year by floating a portion of the company on the junior market of the Jamaica Stock Exchange. Months later, it also floated a 10 per cent corporate bond that will mature in 2019.

The two fund raising events brought in more than $260 million of fresh capital. The injections erased ISP's deficits and $7 million of negative equity, and at year end December 2016, the microlender reported a more muscular capital base of $234 million.

ISP is expecting to grow this year even as the sector opens up to new competition, not least of which is conglomerate GraceKennedy, which is setting up a microlending network that piggybacks on its existing money services infrastructure.

"We feel there is quite a bit of growth in our sector and we welcome the competition," Smith said.

Smith is buoyed by the latest surveys showing confidence at record levels as the Jamaican economy improves.

"There is an uptick in business confidence and we hope in our case it will translate into increased business. We think it will," he told Gleaner Business.

Core revenue, that is, interest income from loans, improved 12 per cent, from $206 million to over $230 million in 2016. Net revenue, incorporating other income and the cost of writing new business for the company, rose from $173 million to $214 million.

NET PROFIT

Net profit rose from $27 million to $40 million, a 47 per cent improvement.

ISP Finance incorporated in 2007 with a staff of three, initialling providing unsecured personal loans to workers in the security industry before expanding to other employee groups. The security market accounted for 45 per cent of all loans.

The company plans to go after business in the public sector.

ISP listed on the junior exchange last April, following an initial public offering that raised $116 million at $2 per share. The stock is now trading at $12.70.

ISP had mainly six loan products in its portfolio at listing. It offers financing to cover personal expenses, such as utility bills, school fees, home repairs and auto insurance, and family emergencies, including funeral expenses and medical costs. The company also provides a variety of funding options for small entrepreneurs in the manufacturing, services and distribution sectors, including traders, hairdressers, bakers and caterers.

steven.jackson@gleanerjm.com