Motor Trade Finances is preparing for higher interest
rates and lower consumer demand by offering new products and
outlets to meet expectations, managing director Angus Bradshaw
The Dunedin-based motor finance company reported a profit
before commission and other gains of $20.7 million for the
six months ended March, up 9% on the $19.05 million reported
in the previous corresponding period.
Commission paid to shareholders increased 10% to $15.6
Sales increased 30% to $200.9 million in the period,
reflecting increased market share and an increase in
franchises from 30 to 33, Mr Bradshaw said.
Unrealised loss on fair value of financial instruments was
$800,000, against a gain of $1.9 million in the pcp, to give
a reported profit of $3 million.
The underlying profit, which removed the volatility of
unrealised fair value movements, was $3.3 million compared
with $3.5 million.
Operating expense, including bad debt, as a percentage of
assets under administration, remained at 2.9%.
Mr Bradshaw said interest rates would continue to rise in the
next 12 months in line with increasing consumer and business
confidence, perhaps dampening demand for motor vehicle
''MTF will target greater market share through increasing
outlets offering MTF products and by offering products at
prices that meet customer expectations.''
The past six months had seen the delivery of technology
improvements that provided a strong growth platform for the
medium term, he said.
Among benefits MTF provided to its loan originators were
industry-leading finance and insurance products, digital
marketing support that returned the customer to the
originator, and a range of daily performance measurements
enabling benchmarking and daily sales and credit performance
Customers had web access to account information.
Increasing regulation had become a challenge for the finance
industry and MTF was using technology to ensure customers and
originators were aware of their rights and obligations.
Customers could be confident products and services provided
met their expectations throughout the terms of the
relationship, Mr Bradshaw said.
Administration expense increased 11%, pushed upwards by legal
fees incurred in defending proceedings brought by the
Commerce Commission, he said.
The trial in the proceeding was held in November 2012 and
judgement was delivered in September last year.
The court rejected the commission's claim MTF failed to make
proper disclosure of components of credit fees payable under
the loan contracts, Mr Bradshaw said.
The court also rejected the commission's claim the labels MTF
used for establishment and account maintenance fees were
misleading and deceptive in breach of the Financial
The court decided some fees charged under the loan contracts
were ''unreasonable'' under the Credit Contracts and Consumer
''The judge called for the parties to discuss quantification
and to make further submissions to the court. MTF has lodged
an appeal against that aspect of the judgement.''
Mr Bradshaw said the board and management were confident
technology, secure funding and a focus on service to
customers and originating shareholders put MTF in a position
to meet the expectations of all stakeholders.