Westpac offshoot has record year

Press, 27 February 1986, Page 23

Westpac offshoot has record year

Westpac Merchant Finance, Ltd, now a wholly-owned subsidiary of Westpac Banking Corporation, recorded its twelfth consecutive record profit in the year ended September 30. The chairman, Mr R. H. V. Douglas, says in the annual report that the company experienced a year of strong growth with assets increasing 80 per cent from $4lB million to $753 million, which puts the company among the three largest merchant banks in New Zealand. Shareholders’ funds increased 60 per cent to $40.3 million.

As previously reported, after-tax profit rose 44.9 per cent to $7,005,000, and was after virtually steady tax of $3,010,000 and after writing off $1,031,000 for unrealised losses on government securities held for trading purposes. The profit represents a return of 22.6 per cent on average shareholders’ funds compared with 20.3 per cent for the previous financial year. Earnings a 50c share rose from, 40.0 to 53.4 cents, but the earnings made on average total assets fell from 1.5 to 1.2 per cent. Mr Douglas says that the year under review was notable for unprecedented volatility and rapid change. The most signifi-

cant changes were: • The removal of exchange controls. • The floating of the New Zealand dollar., ; • The removal of most restrictions on offshore borrowing. O The removal of statutory reserve assets ratios. • The introduction of Treasury Bill tenders. This led to marked volatility in interest rates and in the exchange rate.

The Government applied a consistent and tight monetary policy which resulted in keen competition for funds and higher domestic interest rates.

"At the time of writing, it appears that an economic slowdown is imminent,” Mr. Douglas says, with some reduction in interest rates likely to come after a decrease in the rate of inflation and easing demand for credit “Recently announced measures to allow additional banking licences

. . . will ensure that competition in the financial sector will intensify for both the available business and for staff resources. At the same time we see new opportunities for continued innovation and diversification .. we look forward with confidence to another profitable year,” Mr Douglas says.