by Paul McBeth
The finance company's head, Mark Darrow, said they had boosted its impaired assets in the five months through November last year as "high leveraged people at risk need provisions" amid falling dairy farm values. Still, he expects this will improve, and has already started to see dairy farms recoup some of their lost value.
"We need the real estate market to pick up a bit, but we've got some interest bubbling under," he told depositrates.co.nz. "The issues of 2008, 2009 will get washed through in 2010."
The company boosted its net interest income by almost 28% in the five months ending Nov. 30, though its earnings were down 10% compared to the same period a year earlier, due to the introduction of the retail deposit guarantee scheme, and increased provisions for bad debt, according to its prospectus statement.
The new prospectus includes PGG Wrightson Finance's excluded deposits, which are not covered by the government's retail deposit guarantee, and Darrow said there had been a lot of interest in the offer.
"The guarantee system is a temporary thing in the marketplace - the quicker we can wean people off it, the better," he said.
Darrow said their rivals had been asking them how to implement a similar scheme, which offers customers a 100 basis point premium.
The company's deposits fell 8.6% to $278 million in the five month period, though its reinvestment rate was maintained at 75%.
Compare PGG's guaranteed and non-guaranteed rates here
Paul is a staff writer for Good Returns based in Wellington.
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