NZI Finance profit rises 48 per cent

Press, 29 May 1982, Page 19

NZI Finance profit rises 48 per cent

PA ..Auckland NZI Finance, Ltd, has announced a 48 per cent higher consolidated net profit of $2,860,000 for the year to March 31. But it warns of effects from any prolonged continuation of the Government's financial services 'regulations imposed last November. '■ The result which compares with after-tax profit of $1,874,629 last year, was reached before inclusion of extraordinary items of $295,000 relating to goodwill written off on consolidation through acquiring a controlling interest in a subsidiary. The chairman (Sir Austin Wilson) said that the company continued to meet a strong demand for lending to the commercial and industrial sectors, with total advances net of unearned income rising from $146 to $166 million. But he said that a prolonged continuation of Gov-

ernment policies would affect the company’s ability to finance worthwhile capital projects in the year ahead. Margins continued to be eroded, with the regulations affecting future profit through the inability to pass on higher funding costs. The company had endeavoured to move more actively into non-funded areas of income, particularly through its wholly-owned merchant banking subsidiary NZI Securities, Ltd. NZI Finance, Ltd's, ability to continue to attract and retain investors upon maturity in the face of a strong and active Government borrowing campaign was “most gratifying,” he said. The general manager (Mr M. J, Wells), said: “Regrettably emphasis on lending activities will focus on areas seemingly more acceptable to the regulations but less desirable to the economy of the country.

“Any form of artificial control creates market distortions, which inevitably affects the free flow of funds and also leads to a subsidy between lender and borrower.” The report says profit was achieved on year-eno assets up $63 million to $3OB million. The earning rate on higher shareholders’ funds to $12.93 million increased to 21.4 per cent. Government stock shown in the consolidated balance sheet increased to $28.7 million and other liquid assets to $61.4 million. Total debenture and deposit borrowings grew to $235.6 million. Mr -Wells said that the second phase of the company computer implementation programme was completed during the year, and all branches now had on-line access to advances, credit control, deposits, and accounting details.