Dunedin specialist vehicle lender, Motor Trade Finances (MTF), has reported an improved interim profit due to lower costs and improved margins.
The company has reported a $4.04 million profit after tax for the six months to March 31, compared with $730,000 for the corresponding time a year earlier, but managing director Angus Bradshaw said it had been a tough year.
Net interest was $1 million lower due to credit margins coming under pressure and higher bank fees.
The half-year report shows how much the vehicle lending market had slowed, with new loans falling from $232.6 million in the six months to March 31 2008, to just $163 million for the period under review.
But steps introduced to preserve its position ensured total income remained almost identical, coming in at $48.3 million.
Profits available to distribute to transacting shareholders was down slightly at $13.4 million, compared with $15.8 million for the previous period.
Net loans under administration totalled $565 million compared with $581 million.
Mr Bradshaw said MTF had managed to improve its interest margins as it had factored in the impact of higher funding costs, into rates charged to customers.
The company had taken some difficult decisions to cut costs during the six-month period, including reviewing non-beneficial expenditure and suspending the staff incentive scheme.
Transacting shareholders had accepted reduced lending flexibility, formerly one of MTF's strong points, he said.
Total assets were 1.5% lower at $609 million and Mr Bradshaw expected assets to reduce further during the year.
The MTF balance sheet was stronger, reflecting capital restructuring, with capital of $60.5 million, up $19 million on a year earlier.
While arrears were within target, Mr Bradshaw warned there was pressure as the economy slowed and increased unemployment meant more customers could not meet their repayments.
"A high proportion of our customers are protected against redundancy, through our payment waiver, which will soften the blow for the customer and the company," he said.
Mr Bradshaw said MTF "continues to operate profitably because the model is simple and because of the daily cash flow generated by loans that are relatively low in value, have regular principal and interest flows and are managed locally by transacting shareholders."
Mr Bradshaw said MTF had shown it had been able to manage its way through difficult times.
