BNZ Finance back on track

Press, 15 May 1987, Page 10

BNZ Finance back on track

BNZ Finance, Ltd, is back on track after burning its fingers in Government stock late in 1986, the annual report indicates; The chairman, Sir George Chapman, reports that the surge in short-term rates later in 1986 meant that margins fell sharply as financing costs rose quicker than higher-yielding securities. (By March of this year wholesale call rates were at 30 per cent and five-year Government stock rates had risen to 18.6 per cent.) The company moved from November and sold virtually all of its longer-term Government stock — about SIO7M worth — and shortened the maturity of much of its substantial holding in shorterterm negotiable securities. The reorganisation was not completed until March, but by February BNZ Finance had restored its monthly profits to budgeted levels, Sir George says in the report. The half-year profit to March 31 was $6.3M, compared with $9.2M in the corresponding six months of the previous financial year. As previously reported, BNZ Finance’s yearly result was better than the previous year. Net profit was up 10.5 per cent at $15,532,000. Operating expenses were up 35 per cent at $8,274,000, and some of this went to improving computer equipnt. This ' allown - thf

mem. is .ilowing _.ie development of new loan techniques such as a fluctuating, variable-rate facility. The telephone call account, which allows floating interest rates on deposits above $5OOO continues to attract depositors, though competition from similar accounts is proliferating. Mr Roger Bonifant, the managing director, says over-draft-like facilities based on telephone-call accounts are now being offered to selected clients. This service is being aimed at individuals of high net worth and small to medium companies. The minimum "overdraft” offered is $50,000 and the maximum $500,000. The money has to be moved in and out in tranches of $50,000. The facility is offered in repsonse to what is seen as a trend away by trading banks from traditional overdraft lending to term loans. At March 31, BNZ Finance’s consolidated receivables and investments totalled $1,062,853,000, up just under S4M on the previous balance date. Consolidated borrowings included 5800.255 M in debenture stock, S7IM in secured deposits, and $20.75M in unsecured deposits. Among the company’s interesting contingent liabilities at March 31 were S7M in open futures contracts,