Hanover's profits soar 50 per cent

Hanover Finance has achieved a record profit for the half year to December 31.

Profits at the company, owned by Eric Watson and Mark Hotchin, were up 50 per cent for the period to $17.4 million - up from $11.6 million in the previous corresponding period.

The results followed a 46 per cent increase in operating revenue to $69.5 million from $47.5 million.

Chairman Greg Muir said while there had been a slight flattening of activity, the company was not seeing any signs of a serious economic slowdown at this stage.

He was confident Hanover was in good shape to weather any short-term economic weakness with strong reserves of capital.

It would not be altering its growth strategy and was prepared to take a medium to long-term view that the fundamentals of the economy were robust.

He said Hanover's improved revenue had been a result of the quality of its lending portfolio.

It further confirmed his confidence in the company since joining the group last year.

Muir is a former chief executive of The Warehouse and is now chief executive of Pumpkin Patch.

"It is an outstanding result on a year-on-year basis and comes on the back of the prudent commercial lending undertaken by the company."

The result also included a provision in respect of the Bayshore/Westpoint development in Melbourne.

"To get a 50 per cent increase in the half-year result in market conditions that have levelled off and which also includes Westpoint provisioning, is exceptional," Muir said.

Hotchin - who is chairman of Hanover Group - has previously told The Herald that Hanover Finance booked a $2 million loss on its investment in the Perth-based property developer. Westpoint collapsed earlier this year leaving hundreds of investors out of pocket.

Muir would not comment on speculation that a major stake in Hanover is about to be sold to an Australian investment bank.

But he said that, in general, it was the case that New Zealand finance companies were starting to get noticed in Australia as they approached the $1 billion asset level.

Hanover's total assets for the period have grown to $938.9 million.

There was also the likelihood of further consolidation in the local finance market but that would be largely among the smaller finance companies and would not affect Hanover.

There have been two moves made on smaller finance companies already this week.

Australian private equity company Allco has bought a 50 per cent stake in Strategic Finance and Allied Farmers Finance has agreed to take a majority stake in Prime Finance.