UDC Finance has posted a 4% lower net profit – reflected tighter margins in lending and deposits, due to increased competition, and a lift in provision expense off historically low levels.
The ANZ-bank owned lender reported after tax profits of $27.3 million for the six months to 31 March 2016, down 4% on the corresponding half last year.
UDC grew lending by 7% compared with the first half last year, with 6% growth over the latest half. Customer investments were stable at $1.74 billion. A focus on cost control saw total expenses fall by 3% from the first half last year and cost-to-income remain below 27%.
Wayne Percival, UDC’s chief executive says: “We’re playing to our strengths by focusing on our core business of asset finance and growing lending across a diverse portfolio while controlling costs.
“With lending assets of $2.5 billion, we’re supporting New Zealand companies by providing asset financing expertise and helping them succeed in business. Provision expenses remain relatively low by historical standards, highlighting the quality of our lending book.”
UDC continued to grow lending through its diversified portfolio, with motor vehicle lending up 7% and commercial lending up 5% over the half. A wide range of industries contributed, including forestry, transport and construction.
“With the strongest lending growth coming at the end of the half, and margin now stabilising, we’re well placed for further growth in the second half,” Percival says.
ANZ is reportedly reviewing its ownership of the firm. It exited its Australian vehicle finance operation, Esanda, last year.
