Challenges on horizon
The board and management at MTF Finance are predicting “the horizon has some interesting challenges emerging”.
The company’s annual report states: “The increase in wholesale interest rates in recent months and sentiment from the Reserve Bank of continued OCR increases through to mid-2023 presents cost and price pressure on our business.
“Funding costs comprise a large portion of our profit and loss and, while we aim to be as competitive as possible, increases will need to be passed on as the market moves.
That said, MTF’s second annual result under the Covid-19 pandemic world “has exceeded expectations, and is cause for some relief and quiet celebration”.
The report adds: “While acknowledging that economic uncertainty still remains, we have rallied to mitigate the impacts of the virus on our business and protect our originators and their customers.
“Sales are strong even with persistent alert-level restrictions and a supply shortage of imported vehicles into New Zealand. Margins have remained solid and arrears are low.”
MTF Finance has reported a 61.3 per cent increase in profit after tax to $8 million for its financial year ending September 30. Underlying profit after tax held steady at $7.45m compared to $7.5m in 2020/21.
Sales increased by $58.4m – or by 12 per cent – and commission paid to shareholder originators increased by 6.2 per cent to a company high of $45.4m.
“While lingering economic uncertainty remains, the strong sales performance, record low unemployment and our loan-rehabilitation programme assisting customers means MTF Finance is able to release some of last year’s Covid-19 credit-risk allowance,” says Glen Todd, chief executive officer.
The company’s balance sheet has a capital ratio of 12.3 per cent. It “continues to be in a strong position to face any downturn in economic activity and support originators through the prolonged pandemic”, and to then support future growth.
MTF Finance’s board approved a final dividend of 2.83 cents per ordinary share, excluding treasury shares held by the company, for payment on November 30.
Total distribution relevant to the period will be 9.80 cents per share compared to 7.11 in 2020 or $2m – up from $1.6m. While this is an improvement from 2020, the distribution is down on the 14.51 cents realised in 2019.