BNZ Finance set to ‘go and grow’

Press, 8 June 1989, Page 30

BNZ Finance set to ‘go and grow’

What sort of a company is BNZ Finance? The managing director, Mr Roger Bonifant, suggested in Christchurch yesterday that it falls between the typical New Zealand finance company and an investment bank. BNZ Finance, 79 per cent owned by the Bank of New Zealand, had a much better year than its parent. In the 12 months ended March 31, BNZ Finance’s tax-paid profit was $25.45 million, compared with $22.34M the previous year. This on net interest income of 553.3 M and other income of $962,000.

“We come closest to a small commercial bank in terms of products,” Mr Bonifant said. The company lends to the mid-business sector. Loans tend to range from $50,000 to SIM, though some are of about $20,000. Not for it HP loans on refrigerators and lawn mowers.

Depositors’ accounts have a minimum balance of $5OOO. BNZ Finance pioneered telephone call accounts in New Zealand. A number of competitors have copied it, but many have lower minimum balances.

The company lends some money to farmers, in this case on mortgage. Any mortgages held on houses will be security for business loans. The bank’s market — too

big to be described as a niche — is being considered carefully by management and directors this year when the possibility of registering as a bank goes through their minds.

Adding “bank” to the company’s name might help distance it from its parent in its year of the big loss.

However, Mr Bonifant, who did not discuss the effects of BNZ’s problems on BNZ

Finance, says there are now about 20 registered banks in the country and seems to be in two minds about the value of the company’s becoming a bank. He described the latest financial climate in the latest year as “horrendous,” survival being the criterion of success. The company’s policy had been one of grim caution, he said. But the firm was now set to “go and grow.” The demise of firms such as Burbery Finance and RSL may have lessened competition for deposits at the smaller end of the finance market, but a number of overseas companies, such as Southslate, have come in. The failures have stimulated interest by depositors in the health of the firms they invested with. “Now it is a question of the return of your money, not the return on your money,” Mr Bonifant says. On the other side of the counter, lenders, reacting to inflation and a recession, are looking for higher equity ratios in borrowing companies, and are taking a keen interest in borrowers’ cash flow, he says. BNZ Finance will keep working in its present track. “We will keep on trucking,” said Mr Bonifant.

The company can handle more business with its present staff and computer system, and is happy to keep to a lean structure. The South Island, for example, is serviced from the Christchurch office with a staff of nine. It is about to move back into the BNZ building in Cathedral Square, but will take less than one floor.

BNZ Finance’s success in getting the mix right in the latest year, and its good name built up over more than a decade suggest that the current year’s result should improve on last year's creditable performance. Mr Bonifant comes from Canterbury. He still has interests in a farm near Ash-, burton. He was educated at Christ’s College and Lincoln College, where he took a master’s degree, before taking an MSc in business studies from the London University. In 1975 he joined the merchant bank, First New Zealand International, in which the Bank of New Zealand held a 40 per cent stake. This was merged with BNZ Finance in 1977.

In 1984, just before the change of Governments, he was seconded to the Prime Minister’s advisory group, in which he served for two years before returning to BNZ Finance.