Experian's outlook highlights North America lending woes

By Eva Mathews

(Reuters) -Experian Plc's annual revenue growth forecast on Wednesday signalled a challenging economic backdrop, especially in North America, where the failure of three U.S. regional banks has hurt confidence in the sector.

The world's largest credit data group expects its annual organic revenue to grow between 4% and 6%, while analysts were expecting growth of around 5.8%, based on company-compiled estimates. Executives also forecast "modest margin growth" for the year.

Experian's shares were down 2% to 26.85 pounds ($33.89) by 1250 GMT.

"The recent struggles of US regional banks, following the collapse of SVB could hold Experian back a little in the near term," said Hargreaves Lansdown analyst Steve Clayton.

The company has benefited from a rise in overall demand for credit reports from businesses and consumers in regions like Latin America, thanks to new product launches.

Experian's key customers include banks, non-traditional lenders and insurance providers, which use its credit reports and scores to analyse and make decisions around credit risk, fraud prevention and lending terms.

The group's consumer business, which provides individual customers with their credit information and helps them raise complaints on credit reports, reported an 11% rise in organic revenue for the year.

"Tighter lending conditions (especially in North America) are impacting some of Experian's business lines with more direct volume exposure, including its core credit bureau and marketplace, which together account for about 17% of group revenue," Bank of America analysts said.

Global banking has been rocked by the closure of Silicon Valley Bank and Signature Bank in March, and the failure of First Republic Bank in May, as deposit flight forced the Federal Reserve to step in with emergency measures.

About 67% of Experian's group revenue comes from the North America region.

For the year ended March 31, Experian's organic revenue growth of 7% to $6.59 billion compared with analysts' consensus of $6.64 billion.

Benchmark earnings before interest and tax stood at $1.80 billion, up 9% in constant currencies.

"However, we expect its countercyclical products (e.g., consumer subscription) to partially offset the credit cycle headwinds,' BofA analysts said.

($1 = 0.7923 pounds)

(Reporting by Eva Mathews in Bengaluru; Editing by Subhranshu Sahu, Sharon Singleton and Jane Merriman)