Strong financial performance

What we measure: The closing amounts receivable from customers translated at constant exchange rates.

Why it’s important: This enables changes in customer receivables to be compared on a consistent basis, which is important because it is a key driver of revenue growth.

How we performed: Closing receivables increased by 6.8% (at CER) due mainly to strong growth of 18% delivered by IPF Digital, with low single-digit growth in both European and Mexico home credit. We expect to accelerate growth in 2025.

What we measure: Revenue divided by average gross receivables before impairment provision.

Why it’s important: It reflects revenue earned from receivables and customer charges,  ensuring our pricing is fair and appropriate to deliver our target returns.  Our 56% to 58% target range reflects our product structure and current regulatory landscape, primarily characterised by rate caps in most of our markets.

How we performed: Revenue yield decreased marginally reflecting the impact of  the rate cap on credit cards introduced in Poland in the first quarter.  Excluding Poland, the revenue yield strengthened to 57.3%, in line with our target range.

What we measure: Impairment as a percentage of average gross receivables before impairment provision.

Why it's important: Profitability is maximised by optimising the balance between growth and credit quality. Impairment rate helps us assess the amount of principal we are unable to collect. Our target range is 14% to 16%.

How we performed: Customer repayments remained strong despite cost-of-living pressures and global economic uncertainty. Our disciplined lending approach supported good portfolio quality and robust repayments, improving the impairment rate in 2024.  We are well positioned to accelerate growth in 2025, and expect the impairment rate to gradually return to our target range.

What we measure: The direct expenses of running the business including customer representatives’ commission as a percentage of revenue.

Why it’s important: To ensure we run our business in the most efficient manner as this ratio is a key driver of profitability. Our medium-term target range is 49% to 51%.

How we performed: The ratio increase was due wholly to reduced revenue in Poland. Excluding Poland, the ratio at 55.4% was in line with 2023 as we invested in growth and transformation capability. We are committed to our target as we deliver growth, build scale and execute our cost-efficiency programme.

What we measure: RoRE is pre-exceptional profit after tax divided by average required equity of 40% of receivables. RoE is pre-exceptional profit after tax divided by average equity.

Why it’s important: RoRE and RoE are good measures of overall shareholder returns. We target 15% to 20%, as this is a return which we consider to be sustainable and balances the needs of all our stakeholders.

How we performed: ROE is lower than RoRE due to the additional capital held above our target level of 40%.  The pre-exceptional RoRE improved by 0.9ppts to 15.7% as a result of improved profitability and a reduced tax rate of 35%. We expect returns to moderate in 2025 due to strong receivables growth which results in extra IFRS 9 impairment charges up front and a modest increase in the tax rate. We expect returns to improve in 2026 before reaching target returns again in 2027.