Wrightson Finance profit down, impaired assets up
Profit at PGG Wrightson Finance tumbled 29% in the first half of the financial year as the finance arm of PGG Wrightson boosted its provisioning for bad loans.
Friday, February 26th 2010, 6:53AM
by Paul McBeth
Net profit fell from $4.7 million to $3.3 million in the six months to December 31 and the company was forced to raise the value of its impaired assets by $6 million to $7.4 million.
Of the company's $551 million loan book, $480 million worth of loans were not impaired or past due date.
Earlier this month the company received a BB credit rating from Standard & Poor's, making it eligible for the government's extended deposit guarantee scheme. If it is accepted into the scheme, it anticipates fees to be about $2 million for the year ended June.
Finance companies and non-bank deposit takers have been scrambling to get their credit ratings before the Reserve Bank's prudential regulations require most lenders outside the banking sector to get rated by S&P, Fitch Ratings, or Moody's Investors Service. Companies need a BB rating or better to qualify for the government's extended deposit guarantee scheme, which will take them through until the end of 2011.
Wrightson Finance lost ground in the ongoing war for deposits among lenders, with its deposits and other borrowings due within one year falling to $65.2 million from $79.8 million, with most of the losses coming out of its rural saver accounts.
RBNZ-imposed liquidity requirements on banks have underpinned the ongoing competition for retail deposits, with financial institutions forced to offer high rates in an attempt to lure investors.
Paul is a staff writer for Good Returns based in Wellington.
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