By Paul McBeth
May 27 (BusinessDesk) - Motor Trade Finance reported a 2.6 percent decline in first-half profit as the auto lender wrote
less business with Turners Automotive Group.
Net profit fell to $4.2 million in the six months ended March 31, from $4.3 million a year earlier. MTF wrote $253
million of new loans in the half, down from $318.3 million a year earlier.
MTF said $49.3 million of the reduced lending was due to less business going through Turners. A non-recourse loan
offered with Turners' Oxford Finance was discontinued after tighter lending criteria sapped demand for the product.
Turners also brought more business in-house, diverting lending that had previously been done by MTF.
The auto lender's receivables still grew to $681.1 million as at March 31 from $651.7 million a year earlier. Its
interest income increased 4.9 percent to $44.7 million, while commission payments rose 7.1 percent to $21.1 million.
The company said it has sufficient capacity to fund forecast growth with $52.8 million of its securitisation facilities
undrawn at March 31. From April 15, its $250 million warehouse funding facility was increased to $300 million.
MTF is seeking to boost lending in tandem with Trade Me Group after a pilot project introduced a finance option on the
website's listings and generated $1.5 million of new loans through to the end of March.
"We have made progress on replacing lost non-recourse business through the partnership with Trade Me, and more is
required," the company said.
"We will continue to balance our focus on retaining our share of the market while looking to the horizon and positioning
MTF Finance so it can adapt quickly in a rapidly changing market."
MTF has been a beneficiary of successive years of record new vehicle sales as a strong currency kept imported cars
cheap, economic growth generated new jobs, and low interest rates made it easier to finance big-ticket items.
It warned that "unprecedented" growth is now in decline, citing the slowing global economy, weaker domestic spending,
and dwindling business confidence.
MTF noted the extra scrutiny lenders are under since Australia's royal commission and New Zealand's proposed changes to
consumer finance law.
"While it is too early to identify the impact on us as a business, and on our customers, we are continuously monitoring
activity to ensure we maintain our commitment to responsible lending," it said.