NZF Group -- owner of Mike Pero Mortgages and Finance Direct -- posted a six-month pre-tax loss of $1.16 million as it tried to stem an outflow of cash ahead of the October expiry of the Crown Retail Deposit Guarantee Scheme (RDGS).The unaudited net opera
NZF Group -- owner of Mike Pero Mortgages and Finance Direct -- posted a six-month pre-tax loss of $1.16 million as it tried to stem an outflow of cash ahead of the October expiry of the Crown Retail Deposit Guarantee Scheme (RDGS).
The unaudited net operating loss for the six months ended September 30 compared with a net pre-tax profit of $2.88m a year earlier, and an operating profit of $3.44m for the year ended March 31.
The Crown deposit guarantee scheme stabilised the market, but also attracted investors seeking a higher, government-guaranteed return with no intention of remaining long-term investors, the company said.
The scheme's expiry on October 12 put "unnatural" pressure on cash flows, resulting in the reduction in secured debenture stock funding to $32.1m at the end of September from $63.7m a year earlier.
"Due to the pressure placed on cash flows nearing the expiry of the RDGS, the group's sole focus became that of increasing liquidity in order to fund maturing secured debenture stock for those investors that relied solely on the RDGS mentioned above.
"This included careful management of our property finance and consumer finance lending books, where in some cases, mortgagee sales prices achieved were less than previously expected due to a slump in property sales and the need to accelerate these to ensure liquidity was maintained."
A conservative approach focused on first mortgage residential lending meant the company was in a reasonable position to recover impaired assets.
Given the tough market conditions and an "extremely stressful period", the result was credible, the company said.
Subsidiaries NZF Money and Finance Direct exited the retail guarantee scheme on October 12.
NZF increased its home loans portfolio during the period, and completed the launch of its first $100m Residential Mortgage Backed Securities issue.
Directors did not declare a dividend, considering it more prudent to retain cash in the current market conditions, the company said.
