Finance firm delivers $4.4m profit
MTF Finance’s profit after tax for the half year to the end of March 2021 has soared to $4.4m, a 67 per cent increase from the same period a year ago.
Sales have also climbed by $16.9m, or 6.4 per cent, over the same timescale as the company bounces back from the impacts of Covid-19.
Glen Todd, chief executive, says the pandemic and its associated lockdown in March and April last year presented “extraordinary challenges”.
“The inability to open our doors for six weeks and the push to offer a digital lending solution for our originators and customers tested our flexibility and adaptability like never before,” he explains.
“Following lockdown, the business has seen month on month improvement with retail receivables climbing back to pre-Covid-19 levels, showing a resilience that our business should be proud of.”
Todd notes the increase in profit was largely because of increased credit risk provisioning in March 2020 as the business prepared itself for a deterioration in credit risk that was predicted across the industry.
The credit risk adjustment, which includes a Covid-19 specific component, has reduced $934,000 to $5.3m.
Underlying profit after tax, which removes the volatility of unrealised fair value movements and provides a more consistent measure of company performance, hit $3.98m. This was an increase of 3.3 per cent from $3.86m in the half-year to March 31, 2020.
Total amounts paid to shareholder originators, including commission, fees and payment waiver, rose 4.9 per cent to $36.1m. Commission paid to shareholder originators was up 4.3 per cent to $22.4m.
Todd says the company continues to closely monitor expense, which fell 10 per cent to $10m through measures to reduce non-critical business spend to help it cope with the initial shock Covid-19 sent through the economy. Savings included voluntary salary sacrifice from the board, management and staff for an extended period.
Competitive environment
MTF’s half-year report was released to the NZX on May 24 and outlines how the board is looking to “up the pace of business adaption in a changing world” and improve its IT systems.
“The business operates in a competitive environment where our competitors are not staying still, and neither can we,” the report says.
“To ultimately win and grow in this market we will need to innovate and provide lending solutions to people through multiple channels, how they want, where they want, and when they want. Online lending will continue to grow in presence, including with key partners like Trade Me.”
The company explains its book is growing, margins are solid and customer quality looks good – “not something we would have predicted 12 months ago”.
Todd adds: “As we have done throughout our 50-year history, supporting our originators, our customers and the communities in which we operate, remains our priority.
“The next six months will be both challenging and exciting as MTF Finance rolls out initiatives to ensure we continue to help more New Zealanders to do more and ultimately become their preferred finance company.”
