1pm’s IFRS9 update highlighted the conservatism in current provisioning, with a minimal impact from adopting the new standard. We have taken the opportunity to review credit and present a range of scenarios (from maintaining current low losses through to a hard recession) and the impact each would have on 1pm’s earnings. The key business message is that, in almost all our scenarios, 2019E profit would be well above the 2017 level. A hard-landing scenario, with losses 1.5x the current IFRS9 worst-case scenario and 4.3x the current level, would see EPS 19% below the 2017 level, and the P/E would be 10x for bottom-of-the-cycle earnings.
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