UDC Finance delivers another record result with $65.3m net

Highlights

• Net profit after tax up 6% to $65.3 million
• Revenue up 10% to $136.5 million
• Total lending increases 11% to $3.22 billion
• Cost to Income (CTI) ratio down 62bps to 25.5%

UDC Finance has posted a record net profit after-tax of $65.3 million for the Financial Year to 30 September 2018, a 6% increase on the prior financial year.
A key contributor to the result was strong lending growth, up 11% to $3.22 billion. Motor vehicle lending increased $217 million (+18%), commercial lending grew by $50 million (+4%) and equipment dealer lending was up $12 million (+6%).

“This is another strong result for UDC and reflects loan growth across the wide range of industries we work with, as well as attention to credit quality and careful cost management,” UDC CEO Wayne Percival said.

“The economy has continued to be strong, and despite slowing growth in the automotive sector as well as reported lower business confidence, UDC has had a positive result.

“UDC has supported the industries that are building the backbone of the country. Growth in commercial lending was driven by investment in equipment across the construction, forestry, agriculture and business services sectors.

“In the coming year, UDC will have a strong focus on the high-demand road transport and construction sectors, particularly in the Auckland market.”

With lending up 11% and revenue up 10% to $136.5 million, the strong result was achieved through balance sheet growth, while also maintaining margins.

Operating efficiency was improved with the CTI ratio declining 62bps to 25.5%.

Cost growth of 7% was driven mainly by an increase in enablement functions as ANZ considered the future strategic options for UDC, including a potential initial public offering. ANZ announced on 31 October 2018 that all sale-related activity has been put on hold.

The credit impairment charge of $10.9 million remains low. However, this has increased $5 million due to growth in the lending portfolio, as well as recoveries and write backs of historic debts in the prior year.

“We have the best and most experienced asset finance team in New Zealand, and our focus remains on understanding the needs of our customers and ensure they’re in the best position to take advantage of growth and build long-term resilience and value in their businesses,” Mr Percival said.

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