BNZ Fin. absorbs SIOM stock loss

Press, 16 May 1985, Page 30

BNZ Fin. absorbs SIOM stock loss

The after-tax profit of BNZ Finance, Ltd, of $8,234,000 — an increase of 24.8 per cent — was earned in spite of a loss of $lO.l million in the Government Stock portfolio, the chairman, Sir George Chapman, says in the annual report for the year ended March 31.

As with other financial institutions holding substantial amounts of Government paper, BNZ Finance was caught in the dramatic change in interest rates over the past year.

At balance date the market value of the company’s Government stock portfolio

was ?5.9M less than cost. Of this reduction, SSM was incurred between October 1, 1984 and March 31 this year. In addition to these unrealised losses, the company incurred, as a result of rising interest rates, realised losses of $4.2M on its Government stock portfolio.

The company continues to experience a low level of irrecoverable bad debts. It therefore reduced the provision for financing losses . by transferring ?2.4 million pre-tax to the profit and loss account. After this transfer the unutilised balance of the

bad debts provision account stood at $4.3M.

The company finished the year with debenture borrowings of S4I4M compared with the previous year’s level of $429M.

Sir George says this was because of the tight monetary conditions prevailing at year end, which reduced the level of short term deposits held. Bank overdraft rose from SI.BM to $10.7M.

Net receivables increased by ?59.3M to $297M.

Dividend has been increased from 5.25 c to 6.25 c a 25c share (25 per cent) and is covered twice.