About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Friday, January 24th, 11:45AM
Latest Headlines

How FEI Investments reinvented itself

A low interest rate environment is driving interest in finance company investments as the expense of bank deposits, one New Zealand operator says.

Saturday, November 12th 2016, 4:45PM

Banks have warned of a “funding gap” as they struggled to pull in enough deposits to meet customers’ appetite for loans. That has led to increased reliance on more expensive, international backing.

But TK Shim, owner of FE Investments, said finance companies such as his were better placed to attract deposits and were achieving healthy growth.

FE Investments has been operating since 2003 and is a non-bank deposit taker with a focus on lending to the small-to-medium business market.

“We don’t really have trouble attracting depositors,” he said. “We’ve been in the market since 2003 and are one of the few survivors of the GFC so we have a healthy trajectory of deposit growth.”

FEI has total assets of $42 million, he said.

“We don’t have the problem of the banks because our interest rates are higher. Whereas in the bank you might get 3.6% our depositors get 6%. If anything, we’re taking deposits from the banks.”

FEI customers typically invest on secured term deposits of six to 36 months. Shim said that led to a high retention rate, as customers received quarterly or semi-annual repayments providing certainty of income.

Almost all loans have security and about half of that is first-ranking.

FEI reported total comprehensive income for the year to March 2016 of $2.143 million.

Shim said, before the global financial crisis, there were about 70 finance companies competing in the New Zealand market.

After the crash that was cleaned out to a handful – of which FE was one. “If you take the view that the New Zealand economy has expanded – as the rockstar economy of the OECD – there is a dearth of competition for us in meeting that demand.”

Reserve Bank data shows there is more than $2.5 billion invested by New Zealanders in deposit-taking finance companies and almost $15b across non-banks, savings institutions and finance companies.

That compares to more than $332 billion with banks.

Shim said 99% of FEI’s loans had security and 50% to 60% of that was first-ranking.

FEI was put on CreditWatch negative by Standard & Poor’s earlier in the year after it had to restructure its $1.7 million loan to troubled wifi company Tomizone but has since had the B stable rating affirmed.

« BNZ offers 4% term deposit rateANZ sells UDC Finance »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment



Printable version  


Email to a friend
Today's Best Bank Rates
Rabobank 1.75  
Based on a $50,000 deposit
More Rates »
News Bites
Latest Comments
  • Reserve Bank critical of life insurance
    “I completely agree with dcwhytes comments. With regard to business replacement - peoples needs and circumstances change...”
    3 hours ago by MediCare
  • Reserve Bank critical of life insurance
    “Bancassurers are more profitable because the products have less client-friendly specifications, i.e. the products are less...”
    4 hours ago by dcwhyte
  • Reserve Bank critical of life insurance
    “That an the fact that NZ has no-fault ACC insurance, no tax deductions for insurance premiums, no compulsory work-place medical...”
    6 hours ago by Doggy
  • Reserve Bank critical of life insurance
    “Another reason kiwi's remain uninsured and scepitical of insurance is as a result of poorly put together commentary on the...”
    6 hours ago by Backstage
  • Reserve Bank critical of life insurance
    “I want to address two issues that are seemingly related. 1.) Once again, a comment on commissions. Firstly the assertion...”
    19 hours ago by Skeptical
Subscribe Now

Deposit Rates newsletter

Previous News


Most Commented On
News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%


About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
Site by Web Developer and eyelovedesign.com