UDC growth 'stabilising' after boom times, but finance company still doing $100m of new lending a month

Times are still good for plant, equipment and vehicle lender UDC Finance, but perhaps not quite as good as they were.

The ANZ owned finance company has posted a $2.7 million, or 10.5%, rise in unaudited half-year net profit after tax for the six months to March 31 to almost $28.4 million, up from $25.7 million in the same period last year. That's record high interim profit and came with 7% lending growth and a cost-to-income ratio of just 26.7%, down 290 basis points from the March half last year.

It continues a run of strong financial results from UDC over the past couple of years, with the company providing a good barometer on the overall economy. This time last year UDC CEO Tessa Price (pictured) told interest.co.nz of an "incredibly positive outlook" and said she couldn't see any clouds on the horizon.

Now Price says UDC's outlook is still one of growth, but at a slower rate.

"Growth has stabilised but off record highs (so) we do need to keep that in perspective," Price said. "Last year it felt like a sprint, this year feels like a well paced run."

"If you looked into our balance sheet it's still growing. And if you look into the April and May numbers, which aren't included in this result, we still had very strong new lending numbers, over $100 million both months," said Price.

"Looking at loans advanced and (the) total portfolio, we're still seeing growth across our core segments on the prior comparable period. But growth year-to-date has stabilised."

UDC's half-year net interest income rose $5.1 million, or 9.8%, to $57.8 million. Total operating income rose $5.8 million, or 10.7%, to $60.6 million. Operating expenses were trimmed $7,000 to $16.2 million. Credit impairments on loans almost doubled, however, to just under $4.9 million from $2.4 million.

Gross loans rose $55.2 million during the six months to March 31, or 2.3%, to almost $2.5 billion. Borrowings rose $29.4 million, or 1.5%, to $1.99 billion. Borrowings include $1.6 billion worth of secured deposits and debentures, and $365 million drawn down on an $800 million ANZ credit facility versus $395 million at September 30 last year.

Total assets increased almost 3% to $2.4 billion, and total liabilities rose 2% to just over $2 billion.

Individually impaired loans and loans at least 90 days past due, combined, stood at $23.9 million at March 31, down from $24.6 million at September 30.

UDC's capital ratio reached 16.6% at March 31, up from 16.2% at September 30 last year. The Reserve Bank mandated minimum is 8%.