Revenue at IBM Global Financing
(IGF) rose slightly during the year to 31 December 2010 compared to
the year before, according to its consolidated financial
results.

Combined internal and external
revenue reached $4.08bn (€2.86bn) in 2010, compared to $4.07bn the
year before. The 2010 figure represented a decline of 8.3% compared
to 2008, when turnover was $4.45bn.

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The slight rise in revenue was due
to increased internal revenue, offset by a decline in external
revenue, which was down 2.8% following a decrease in financing
revenue.

A statement released by parent
company IBM in its annual report for 2010 said: “As the global
economy continued to emerge from a challenging credit environment,
the Global Financing business delivered strong financial
results.

“The Global Financing business
continued to remain focused on its core competencies – providing IT
financing to the company’s clients and business partners.”

Total pre-tax income came to
$1.96bn increasing 13.3% from $1.73bn in 2009, while gross profit
was up 3.4% to $2.61bn in 2010. This was attributed to higher gross
profit from used equipment sales.

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Sales of equipment, mainly sourced
from end-of-lease assets, represented 47.4% of IGF’s turnover in
2010, compared to 43.7% in 2009.

The increase in pre-tax income for
2010 was driven principally by a drop in financing receivables
provisions, which fell by $152m, as well as the rise in gross
profit of $85m.

The drop in financing receivables
provisions in 2010 was attributed to lower specific reserve
requirements and recoveries on previously reserved accounts.

The company statement added:
“Interest rates and the overall economy, including currency
fluctuations, will have an effect on both revenue and gross
profit.

“The company’s interest rate risk management policy, however,
combined with the Global Financing pricing strategy should mitigate
gross margin erosion due to changes in interest rates.”