Hanover's rating reconfirmed
Fitch has confirmed its rating on Hanover at BB+, one step below investment grade. It has also assigned a "stable" tag to the rating indicating that it doesn't expect to raise or lower it in the near future.
Monday, April 21st 2008, 11:30AM
"Although Hanover Finance has a healthy appetite for risk, it has incurred only minimal credit losses over an extended period. This can be attributed to good risk controls and a relatively benign credit environment," Fitch says.
The rating agency says Hanover has strong profitability ratios – return on equity (ROE) is in excess of 30% and net interest margins above 5% – which somewhat compensates for the risk associated with property development lending.
Australia is a growing part of its business and now accounts for around 20% of revenue.
Hanover Group chief executive Bruce Gordon welcomed the rating review and said the company's priorities over the past year included "maintenance of a conservative cash position, selected lending on quality assets, and rigorous debt collection and provisioning."
"We remain vigilant in ensuring borrowers meet their loan obligations and outstanding monies are recovered, a point noted by Fitch Ratings in commenting that Hanover Finance demonstrates a level of expertise in minimising losses in this area," Gordon says.
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