(Yicai Global) July 17 -- Home Credit Group, a consumer lending firm whose largest market is China, has filed for an initial public offering in Hong Kong that sources suggest could fetch up to USD1 billion.

The Amsterdam-headquartered firm boosted net profit at a compound annual growth rate of 48.1 percent from 2016 and 2018, according to an application proof published by the Hong Kong Stock Exchange. Revenue grew 41.1 percent over the same period, while the company's return on average equity was at 21.1 percent at the end of March this year, up from 16.2 percent three years earlier.

Founded in 1997 in Prague, Home Credit is a subsidiary of PPF Group, whose majority shareholder Petr Kellner is one of the Czech Republic's richest men. The unit moved into consumer financing in 2007 and its 2010-established Home Credit Consumer Finance was one of the first four companies to get a consumer lending license in China. It is still the only licensee fully backed by foreign capital.

Home credit had EUR20.9 billion (USD23.4 billion) in outstanding loans as of the end of March this year, with China making up EUR13.4 billion worth to give the firm a roughly 28 percent share of the Chinese consumer finance sector.

But it has been struggling in its largest market since 2016, with its non-performing loan ratio rising to 9.7 percent as of the end of last year, up from 7.2 percent in 2017 and 4.3 percent in 2016. To fight back, it has kept interest rates high -- sparking controversy -- which it claims was in preparation for a credit bubble, improved the accuracy of data analysis and allowed it to move in line with macro-economic changes to prevent losses.

The lender's average interest rate was 20.74 percent last year, according to data from a rating agency. Some loans even surpassed 36 percent, a threshold above which China's legal system considers a loan contract invalid.

Editor: James Boynton