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Avanti gets good report card

Avanti Finance’s move towards residential loans and its strong broker support augur well for the company, a recent report says.

Tuesday, November 29th 2016, 12:58PM

Ratings agency S&P recently confirmed Avanti’s BB credit rating, reflecting the company's “very strong capitalisation levels and sound and defendable business model, underpinned by a well-articulated and executed strategy.”

“Avanti's business model is transitioning toward a higher proportion of residential mortgage loans within its business mix--a business line that we consider highly commoditised and competitive.”

S&P says there is “a lack of meaningful competition in the non-bank sector within Avanti's chosen target market and adopted points of distribution – third party distribution.”

It says Avanti has a long-standing and successful history with brokers which augurs well the company.

Avanti's business position strength is broadly in line with the industry average for non-bank financial companies in New Zealand.
S&P says Avanti is targeting first secured residential mortgages at close to 50% of stock during the next three years, up from 35% currently, with the remainder comprising a mix of motor vehicle loans, other consumer and property loans, and some small to medium-size enterprise loans.

“We also expect the finance company's operating revenue mix to shift toward a higher proportion of net interest income as a result of the forecast growth in residential mortgage lending (currently 65% of operating revenues), which we consider as having good recurring characteristics and forecast to increase toward 75% in the next three years.

“Growth forecasts are strong for the next three years, with compound annual growth at more than 30%.”

S&P notes Avaniti has received $7 million of new committed capital from existing and new shareholders to help fund growth.

It also says banks have been providing a good level of support. “To date, the finance company has had little trouble extending the support of its long-dated warehouse funding, and we currently foresee little risk of this changing in the next 12 months.”

Tags: Avanti S&P

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Lender Flt 1yr 2yr 3yr
AIA 5.95 4.85 5.35 5.65
ANZ 5.94 ▲5.95 ▲6.40 ▲6.59
ANZ Blueprint to Build - - - -
ANZ Special - ▲5.35 ▲5.80 ▲5.99
ASB Bank 5.85 ▲5.35 ▲5.80 ▲5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - ▲5.35 ▲5.69 ▲5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 ▲5.95 ▲6.29 ▲6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - 4.75 - -
Co-operative Bank - Owner Occ 5.85 4.85 5.35 5.65
Co-operative Bank - Standard 5.85 5.35 5.85 6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.95 5.45 -
Heartland Bank - Online 4.10 ▲4.40 ▲4.90 ▲5.10
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.10 5.00 5.75 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 ▲6.19 ▲6.69 ▲6.79
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 ▲5.19 ▲5.69 ▲5.89
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society 6.45 ▲5.55 ▲6.15 -
Pepper Money 4.49 - - -
Resimac 6.19 5.60 6.16 6.29
SBS Bank 5.79 5.05 5.69 5.89
SBS Bank Special - 4.55 5.19 5.39
Select Home Loans 4.09 4.29 4.86 5.09
TSB Bank - ▲5.65 5.79 ▲6.45
TSB Special ▲4.89 ▲4.85 4.99 ▲5.65
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 ▲5.95 ▲6.29 ▲6.59
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.94 - - -
Westpac Special - ▲5.35 ▲5.69 ▲5.99
Median 5.85 5.05 5.69 5.99

Last updated: 27 June 2022 8:43am

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