UDC Finance, the plant, equipment and vehicle lender owned by ANZ, has posted a 27% rise in half-year profit as income rose, expenses fell and write backs pushed provisions for bad loans out of the red and into the black.
UDC's financial statements show unaudited net profit after income tax up $5.1 million, or 27%, to $23.8 million in the six months to March 31 from $18.7 million in the same period of the previous year.
"In the past year, UDC has reduced its cost-to-income ratio by 11% and grown lending by $29 million, or 5%," UDC’s CEO, Tessa Price, said.
“Our strong focus on quality lending has continued to deliver results in financing investment by Kiwi businesses in vehicles, plant and equipment," Price added. "This growing readiness to invest, and signs that businesses are gearing up for better times, reflect an encouraging lift in confidence in the economy."
Net interest income rose $3.5 million, or 8%, to $46.8 million, and total operating income rose $3.6 million, or 8%, to $47.3 million. In contrast operating expenses fell $720,000, or 5%, to $15 million. After recording $1.799 million worth of provisions for credit impairments in the first half of its last financial year, this time around UDC recorded a write back of $892,000.
Gross loans rose about $36 million during the first-half of UDC's financial year to about $2.352 billion. Secured debenture stock on issue rose about $49 million in the three months to March 31 to $1.466 billion. UDC also has an $800 million ANZ Loan, of which $290 million was drawn down at March 31, unchanged from September 30.
Meanwhile, UDC's individually impaired loans dropped $17.4 million, or 29%, to $43 million, and loans at least 90 days past due but not impaired fell $9.9 million, or 59%, to $6.8 million. As of March 31 UDC's capital ratio was 16.3% versus 15.3% at September 30 last year, and compared with the Reserve Bank mandated minimum of 8%.
In a Double Shot interview in April Price told interest.co.nz sentiment and confidence among borrowers had improved with customers less nervous and prepared to buy assets earlier in their plans than they had been last year across a range of industries.
UDC's $37.95 million profit for the year to September 30 last year was the highest annual profit it has recorded since 2004.