NZF Group Ltd said the collapse of South Canterbury Finance has been negative for reinvestment rates for other finance companies and the Crown's retail deposit guarantee scheme has distorted the market place for finance companies.The comments were made at
NZF Group Ltd said the collapse of South Canterbury Finance has been negative for reinvestment rates for other finance companies and the Crown's retail deposit guarantee scheme has distorted the market place for finance companies.
The comments were made at the company's annual meeting where shareholders were told conditions are still difficult for finance companies.
"The good news is that we are still here but of course the bad news is that the housing market and financial services markets are very difficult and liquidity is tight," the company told shareholders.
The company has reduced its reliance on debenture funding to 15.3% as of today from 23% at its balance date.
Pressure still remains to continue to reduce debenture funding and its need to be reduced has been amplified by the collapse of Allied Nationwide Finance and South Canterbury Finance.
"The impact of the demise of these two large non-bank finance companies has been swift with reinvestment rates having reduced, however, with fewer non banks in the market place these should improve over the next 12 months," the company said.
The board continues to undertake risk adverse strategies, which include calling in overdue loans in NZF Money.
The Crown guarantee, which for many companies including NZF Group subsidiary NZF Money expires on October 12, and this has provided a distortion in the market place.
NZF Group was the first financial institution to issue residential mortgage backed securities (RMBS) in the New Zealand market place since 2007.
The company said demand for quality RMBS in New Zealand is growing and with the funds under management building in various Kiwisaver funds, this should continue to be the case over the coming years.
