KEY POINTS:
The New Zealand non-bank finance sector slowed in 2007 amid signs the favourable credit landscape enjoyed for the past seven years has ended, a KPMG survey shows.
Total assets of the sector slowed by 6.9 per cent, snapping a stint of double digit growth since 1999, according to
KPMG's 22nd Financial Institutions Performance Survey of 43 non-bank finance companies.
Net profit after tax for the group ballooned 45 per cent thanks to UDC's $87 million gain from the sale of its fleet business. Excluding this gain though, after-tax profit rose a modest 14 per cent, with four companies, excluding those that went into receivership, reporting a loss.
Gearing ratio for the sector climbed 1.42 percentage points due to improved profitability, a rise in issued share capital and provision for the international reporting standards.
Margin improvement drove earnings and asset growth for the relatively large diversif ied and property development and commercial financiers.
Total assets for property development and commercial financiers increased 12.3 per cent, compared with 27.8 per cent a year ago, a result "consistent" within this sub-group following the collapse of peers such as National Finance 2000. Dominon Finance was hailed as the standout performer with its 38.3 per cent asset growth.
Net profit after tax for the group jumped 30.3 pecent to $108 million, with 13 of 14 companies in the group posting underlying performance growth.
Net profit after tax for the diversified finance group, excluding UDC's fleet divestment, climbed 16.1 per cent.
The motor vehicle finance contingent became a casualty of declines in four key global motor vehicle companies, namely Primus Financial, which delivered the largest fall in assets and was the biggest drag on the sub-group's 14.8 per cent decline in net profit after tax. Interest margins contraction also contributed to the segment's profit decline. Total assets slipped 1.8 per cent.
Total expenses jumped 53 per cent, or $48.3 million though a huge part of this came from GE Finance and Insurance, whose results only included current year results for the Pacific Retail business it bought in 2006.
The number of consumer finance companies dropped to five after the demise of Five Star Consumer Finance. Total assets fell 1.3 per cent, compared with 16.4 per cent growth a year earlier. Net profit after tax dropped 9.5 per cent because of FAI Finance and Instant Finance.
Net profit for the savings institutions industry dropped 10 per cent to $35.8 million because of Southern Cross Building Society's 87 per cent slump in profitability. A rise in competition dragged total asset growth into single digit category for the first time in five years, up 7 per cent.