Instant Finance lifts full-year profit

Instant Finance has posted an 11 % gain in full-year profit on growth in interest income and the launch of its MyFinance brand.

The Auckland-based company's profit rose to about $7.2 million in the 12 months ended March 31, from $6.4 million a year earlier.

Interest income climbed 5% to $24.5 million, helping lift total income by 9.5% to $36.6 million. Its interest expense fell 2.6% to $6.1 million.

Instant Finance offers personal loans from $200 to $20,000 at interest rates ranging from 19.95% to 29.95% a year.

It funds its loan book via a $60 million wholesale facility, drawn down to $46 million at year end. Westpac Banking Corp is paid out against securitised loan receivables held in a special purpose trust as well as $12 million raised from redeemable preference shares and $8 million of shareholder advances.

While its interest rates are up in loan shark territory, Instant Finance touts a high level of customer care and repeat business as evidence it treats its low-income clients, many from South Auckland, with respect.

About 69% of its $92.2 million of loan receivables, before impairments, are in Auckland and about 39% are past due although not impaired. The company's impaired assets in the latest year include $2.5 million of bad debts written off.

"We operate at the difficult end of the market, so we're always up for ignorant people to criticise what we do," chief executive Richard de Lautour says.

"We genuinely believe we provide our customers with a helping hand. We have an unbelievably loyal customer base." 

Instant Finance has about 26,000 active customers and 23 retail branches.

He says the company's "huge customer base" in South Auckland didn't benefit from New Zealand's so-called rockstar economy or see benefit from dairy prices when they were high. "They've had it tough since the GFC," he says. But in the past 18 months, there have been signs of a pick-up in jobs.

"Categorically I can say for the past 18 months, manual-type workers in South Auckland have seen an upturn in hours available," he says. 

While Instant Finance has some capacity to expand it also launched MyFinance, aimed at "the next tier up" of borrowers and offering to lend for everything from cars to overseas travel - what de Lautour calls "more aspirational lending."

Notes to the company's annual accounts show its own funding costs average 6.93%, including a rate of 5.67% on its wholesale facility and 9% on its preference shares.

(BusinessDesk)