IMPORTANT UPDATE:
15 September, 2008
As almost 40 of the almost 100 financial institutions who were being scored under this program have now exited the New Zealand market, as a result of either bankruptcy, receivership, moratoruim, closure, or withdrawal, the basis if some aspects of this product need review. Specifically, we are concerned the 20/30/40/10 ranking basis for assigning the scores A/B/C/D may lead to confusion when assessing the history of the SQP Scores.
Therefore, we are suspending further scoring, pending a full review and re-assessment.
We will continue to summarise and publish the financial statement summaries of all institutions -- it is just the scoring that is being suspended.
We apologise to our regular users of this service, but due to the fast shrinking of the number of insitutions, some strong institutions are at risk of lower scores solely because (for example), being in the top 20% of 98 insitutions is quite different from being in the top 20% of 68 institutions. Those that move down in this environment may not necessarily be indicative of a 'relative weakening'.
You can see the list of institutions that have been seriously damaged in the credit crisis here >>>
The following content on this page is retained for archive purposes only.
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The SQP Score © is designed to assist investors in bank and finance company term deposits, and secured debenture stock, to easily assess the relative financial positions of the companies offering such products.
Like all other aides, it is not recommended you use the SQP Score © as your sole assessment tool. Nothing beats professional research into a specified requirement, and you should engage a professional adviser whom you trust before making any commitment to invest money. This SQP Score © is no substitute for the information each institution is legally required to give you. You should read and understand that information, and use it, and other information you receive from your professional adviser, before you invest.
The SQP Score © is a ranking code of New Zealand financial institutions, and is based on JDJL's extensive database of financial company performance. Summaries of individual company financial information is available free on-line at www.interest.co.nz/coinfo
These score codes are only found on our two Term Deposit pages, from the menu above.
It tells the investor where a particular institution stands amongst its peers in three separately scored attributes: - Strength - Quality - Profitability It is calculated annually from the financial accounts provided by each institution, either directly or sourced from the data on the Companies Office website.
It is a relative ranking of all 90+ institutions offering fixed interest products to the public.
It is not a credit rating, and does not replace credit ratings. By its very nature, it cannot reveal information not in the published accounts, nor can it reveal material information that may occur subsequent to the publication of those accounts.
The SQP Score © is derived from a number of measures and ratios in each of the three attributes (Strength, Quality, Profitability), and combines them in an easy-to-understand letter code. Scores for each attribute are independently ranked, where
- the top 20% in each section receive an ‘A’ designation
- the next 30% in each section receive a ‘B’ designation
- the next 40% in each section receive a ‘C’ designation
- the final 10% in each section receive a ‘D’ designation.
This understanding will help any investor or investment advisor make an choice of a shortlist of companies offering deposit products, by providing a useful and clear indication of a company’s relative financial strengths and weaknesses.
It may also aid the investor to understand the interest rate premium a bank or finance company is offering, over base government bond yields. The SQP Score © is not a credit rating, and it is not a predictor of the future ability of any institution to pay interest at the level it advertises, nor a predictor that capital sums invested will be returned at the end of the term of a deposit.
The SQP Score © is derived entirely by numerical scoring and ranking and is not based on any personal judgments by JDJL. You can find the SQP Score components here >>>
The first letter ranks relative Strength, measured by a number of financial statement ratios (eg: gearing, etc.) and the absolute size of its Total Assets. For example, an SQP Score © of B would indicate the company ranks against its peers in between the top 20% to 50% of NZ financial institutions. A SQP Score © of C on the other hand would indicate the company ranks against its peers between 50% and 90% of NZ financial institutions.
The same ranking system is used for the second letter, except this ranks Quality, measured by a number of financial ratios including, bad debt expense history, provisions for loan losses, maturity analysis of both Loans and Advances as well as the deposit liability to investors, and the absolute size of the Shareholders Funds invested in the business.
The third letter measures the rank of Profitability covering a range of weighted measures over a three year period. An A rank would mean that company ranks in the top 20% of NZ financial institutions.
The SQP Score components are set out here >>>
The SQP Score© for all New Zealand financial institutions, including banks, are set out on the term deposit pages of this website, here for term deposits less than 1 year, and here for term deposits from 1 to 5 years.
Keeping the SQP Score© up to date
Updates are done quarterly, about 75 days after the end of each quarter for those institutions that report their full-year audited results. We will update our Financial Statement database as soon as we receive the latest accounts. Between our receipt of their results and the SQP Score © update, the code will show  . (The SQP Score © cannot be updated immediately because it is a score based on a relative ranking and that requires an assessment of all institutions.) The previous SQP Score © will be available in the Financial Statement database.
PLEASE NOTE: Due to operational constraints, the next update of the SQP Score will now not be published until Monday, 25 June 2007, one week later than our normal schedule.
If the SQP Score is labelled 'withdrawn', it means that previously issued and scored accounts have been updated by the company. The previously issued SQP Score no longer applies. Our data now shows the newer, latest accounts. These accounts will be used in the next scheduled re-scoring.
By making it an easy-to-understand ranking code, investors now have an easy-to-use tool to make a short list of potential companies to invest in for fixed-interest deposits. It may also help some investors assess the rate premium being offered for those products.
We record company account as they are received. If we receive them before the audit sign-off, we add them to our records but bark them "audit pending" until the next SQP Score © re-ranking.
The SQP Score © and related logo is protected intellectual property and may only be used when licensed. For licensing information, contact us here >>>
For more information, please email us at info@interest.co.nz
The information on this page was last updated June 2007.
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