Experian affected by US sub-prime loans crisis

Shares in the global credit information group, Experian, plunged by 7% as investors took fright at the company’s exposure to the sub-prime loans crisis in the US and cautious lenders in the UK.

The group, which was de-merged from GUS retail 12 months ago, announced group sales up by 6% in the 6 months to end of September, not including gains from acquisitions.

Experian said revenue growth would have reached 8% if “Lower My Bills”, its American home-loans price comparison website, had not been affected by a standstill in the US sub-prime market.

Experian receives a commission from lenders whose websites are accessed through Lower My Bills. They pay Experian for a credit check on customers who click through.

Furthermore, Experian acknowledged that its credit services division contributed 44% of annual revenues had been hit by increasing decline in mortgage origination, despite this area being its largest business.

The company said it had offset weakness in its US credit services by providing other services to banks as cautious lenders concentrate on managing their existing debtor books rather than issuing new loans.

Experian’s chief financial officer, Paul Brooks, said the market environment for UK financial services is tough, affecting Experian’s credit and marketing-related activities.

Over half of Experian’s global client base is made up of financial services companies. However, the group concluded that it had increased other areas of its credit services including debt collection and account management.

Story link: Experian affected by US sub-prime loans crisis