MCB consumer loans grow as bigger banks shy away

LONDON, Sept 5 (Reuters) - Tightening consumer credit at mainstream banks is boosting lending volumes for Baltic small loans provider MCB Finance Group Plc (MCRB.L: Quote, Profile, Research) which reported strong trading in its first-half results statement on Friday.

MCB, which offers small loans in Finland, Estonia, Lativa and Lithuania to consumers who cannot get credit from mainstream banks, is on target to lend over 60 million euros this year, compared to 24 million last year, the company told Reuters.

"People need credit in markets like this, if traditional banks are tightening (their lending) then more volumes come to the non-standard sector," said Chief Financial Officer Henry Nilert said.

MCB narrowed its first half pretax loss to 565,000 euros from last year's 1.6 million loss on revenues of 5 million, and is now trading profitably on a monthly basis.

The company said it had a strong repayment performance in the first half, despite a weaker macro economic environment in the Baltic states.

"We have a relatively short book which gives us good visibility," said Nilert. The company typically offers loans of 100-2,000 euros which are repayable between 1 to 6 months.

International Personal Finance (IPF.L: Quote, Profile, Research) (IPF), a small loan provider in central Europe, Romania and Mexico, reported a 39 percent rise in first half profit in July, and an increase in consumer loans also drove first-half profits up 16.8 percent at subprime lender Cattles (CTT.L: Quote, Profile, Research) last week.

MCB also said on Friday it plans to raise a further 5 million euros to fund growth. The AIM-listed company is targeting untapped Eastern-European markets through its mainly online distribution channel and Credit24 brand.

Nilert said MCB is eyeing expansion in up to two new markets over the next 12 months, but it is not considering Russia and the Ukraine, where larger rival IPF has set its sights.

MCB shares were flat at 146 pence by 0824 GMT. (Reporting by Lorraine Turner; Editing by Louise Ireland)