Promising results for MTF
The first half of the 2022 financial year has been described as “promising” for MTF Finance as New Zealand learns to live with coronavirus and adapt its strategy “from one of elimination to minimisation and protection”.
Chris Lamers, chief executive officer, says: “Our business is no different with Covid-19 now forming part of our business-as-usual approach.
“Disruption caused by lockdowns creating sales volatility is not currently a threat, although further strains are possible. The current economic climate with cost escalations and logistical delays are creating pressures on the business.”
Coupled with the start of core technology investment, operational spend has increased as signalled.
This has impacted profit after tax. It decreased by 2.5 per cent to $4.3 million during the half-year from the same period in 2021.
“This short-term impact was planned for as part of the longer-term transformation of the business commenced by the board last year,” says Lamer, pictured.
Underlying profit after tax, which removes the volatility of unrealised fair-value movements and provides a more consistent measure of company performance, fell by 28 per cent to $2.87m when compared to $3.98m for March 31, 2001.
That said, MTF issued new loans during the past half-year totalling $297m – the second best in its history.
Lamers says: “The growth in sales is pleasing as it comes at a time when credit demand is contracting. The drop in profit is in-line with expectations and earlier signalling as MTF Finance continues to reinvest to deliver strategic intent.
“We will continue to invest in our brand, product development and addressing legacy technology systems in the medium term, ensuring the company is well set up to deliver on growth targets to provide increased and sustained returns to shareholders.”
Total amounts paid to shareholder originators, including commission, fees and payment waivers, decreased by 3.9 per cent to $34.7m. Commission paid to shareholder originators fell by 1.1 per cent to $22.2m.
The first half also saw the company pilot and or launch new products with the aim of providing franchises with additional unsecured product and rejuvenating the declining dealer market.
Expenses increased by 25.2 per cent primarily due to factors aligning to the business’ strategy and reinvestment for future growth.
Lamers says: “The year-on-year increase is inflated due to the business taking proactive measures to reduce business spend in prior periods to get through the initial shock Covid-19 sent through the economy with the pre-pandemic increase representing 12.7 per cent.
“Our market share has seen positive gains in the first half of the year since the [amended] Credit Contracts and Consumer Finance Act came into force [in December] as other finance companies have struggled to a greater degree to implement timely compliance changes.
“The pandemic did not strain our business in the manner originally provided for. The timing is right for us to progress our strategic intent while remaining cognisant of our shareholder originators’ need for cashflow certainty.
“We have set some bold goals and the team have laid a great platform from which to achieve these. It is an exciting time for MTF Finance as we continue to push into new channels and look to generate improved returns for all stakeholders.”
