Angus Bradshaw
Dunedin-based Motor Trade Finances faced an uncertain
future with confidence, managing director Angus Bradshaw said
in the company's annual report.
"We do not expect life to return to pre-2008 'normal' until
well into 2012.
"We will manage MTF in the prudent fashion that has ensured
our survival," he said.
MTF reported a tax-paid profit of $5.3 million for the year,
down on the $8.8 million reported in the previous
corresponding period.
New loans were down at $267 million ($288 million last year),
reflecting lower motor vehicle sales.
Assets were down by 13.8% to $462 million as a consequence of
that.
Net interest income, as a percentage of average loans under
administration, increased to 7.9%.
Mr Bradshaw said profit before commission paid to transacting
shareholders had remained steady at $32.7 million despite
reducing finance receivables and increased bad-debt expense.
"This is a reflection of improved interest margins as the
company has encouraged transacting shareholders to charge
interest rates that more accurately reflect individual credit
risk."
Since 1995, MTF had sourced the bulk of its funding from
asset-backed securitisation through the issue of euro
commercial paper by MTF Securities Ltd.
Investors deserted the asset commercial paper market at the
end of 2008.
Since then, MTF had been working with its bankers and
professional advisers to implement a funding structure to
replace the securitisation programme, he said.
MTF, along with Trustees Executors, Commonwealth Bank of
Australia and Westpac, completed the establishment of MTF
Warehouse Trust and the MTF Settlement Trust on November 4.
"This is a significant milestone in the history of MTF and
provides a funding platform that will enable the board and
management to drive the company forward as a market leader in
vehicle finance."
Arrears management had been a primary focus of the company
and its shareholders, Mr Bradshaw said.
At the end of the financial year, 31-plus day arrears were
1.7% (2.47% last year).
Provisions for specifically impaired assets were $2.7 million
($3.3 million).
MTF had written off $2.8 million of loans ($1.9 million) it
could not recover from borrowers or shareholders.
New loans had bottomed out in August 2009 and since then MTF
had seen improving sales activities, Mr Bradshaw said.
Used-car finance was improving and new-car finance had seen
"reasonable growth".
MTF expected some pressure on motorcycle financing for
recreational bikes and farm bikes, both of which had an
element of discretionary spending.
The direct franchise continued to grow by the number of
franchises and the volume of business generated, he said.
MTF would continue to doubt the economic forecasters until
the recovery was reflected in the confidence and actions of
the real economy, Mr Bradshaw said.
That would be characterised by small to medium-sized
businesses and the rural producers that provided New
Zealand's export revenue.
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