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Assessing the strengths and weaknesses of fin-cos

Published: Mon 4 Oct 2004 11:38 AM
Assessing the strengths and weaknesses of finance companies
New feature available from http://www.interest.co.nz
When you invest in term deposits, you want to earn the best return possible, without taking unnecessary risk.
But assessing risk is the hard part.
A new resource is now available to every investor. You can do-it-yourself with a few easy clicks, free on the internet.
http://www.interest.co.nz has released a unique feature that makes it very easy to look at, or print out, a key profile of a bank or finance company’s latest financial statements.
And, this same feature analyses those financial statements into a series of Assessments.
These Assessments provide a snapshot look at six key aspects - Profitability, Growth, Strength, Quality, Efficiency, and Exposure.
These snapshots look at the last three completed financial years, giving the reader an excellent view of the company’s recent track record.
An additional and valuable feature allows you to compare the latest profile of up to three different institutions, all on the same page.
Using credit ratings is a good strategy to assess risk, but many term deposits, secured debentures, and unsecured offerings do not have a credit rating. Then there is the problem of making sense of the various credit rating codes. What do they mean, and how do you apply them to your situation?
Each financial institution (banks and finance companies) is required to give the investor an Investment Statement, and each institution will make its financial statements available if you ask. And, of course, those financial statements are posted on the Companies Office website.
There are plenty of sources and resources available to the investor. But accessing them, and making sense of them, is not easy. It is both time-consuming, and technical.
Investing in the services of a qualified professional adviser is the good idea also. They have access to expensive technical analysis, and can provide professional advice based on your appetite for risk.
Complementing these resources, interest.co.nz provides a free service where any investor can do some important pre-qualification before contacting a short-list of financial institutions. This new resource is not a substitute for a full analysis before investing – but it is a very easy way to pre-qualify financial institutions, and to target aspects of their financial strengths that you think are important.

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