Geneva profits jump 56%

Geneva Finance now expects net profit before tax (NPBT) to be between $6.3 million and $6.5m for its 2021 financial year.

That’s up by 56 per cent on 2019/20 with trading results since September exceeding expectations across consumer finance in New Zealand and Tonga, and its insurance, invoice factoring and debt-collections units.

Managing director David O’Connell says: “While we were pleased with the September 2020 half-year result [NPBT at plus 44 per cent on the previous year] and had reservations regarding the recurring risk of further lockdowns, hard work from the management team has seen continued improvements across every unit.”

Each division contributed to the profit increase, although the finance operations – invoice factoring and consumer finance – and Quest Insurance provided most of the uplift. 

“New lending volumes are tracking well-ahead of last year,” adds O’Connell. “The traditional seasonal spike in finance arrears has also been lower than previous years, reflecting continued improvements in ledger quality. The debt collections and debt litigation business are similarly showing consistent improvements.

“In light of the improved trading position, the directors are of the view that the final dividend for the March 2021 year should be restored to 2.25 cents per share. This dividend was reduced from 2.25c to 1.75c following the March 2020 lockdown.”

The updated NPBT guidance for 2020/2021 implies the indicative full-year dividend of about 3.50c equates to a dividend pay-out rate of about 35-40 per cent of NPBT, which directors consider appropriate in the current environment.

While there remains the risk of further Covid-19 lockdowns affecting performance, the board is encouraged by the broad-based profit improvement, “which reflects increased focus on the core lending businesses supplemented by related insurance and debt-collection functions”.