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MTF's lower profit, increased market share

NZ Newswire logoNZ Newswire 21/05/2017 Rebecca Howard

Motor Trade Finance reported a 3.4 per cent slide in underlying profit but continues to grow market share in a very competitive car lending market.

Profit was $4.4 million in the six months ended March 31 from $2.9m a year earlier, after an unrealised gain on the fair value of financial instruments totalled $600,000 compared to a $1.3m loss in the same period a year earlier.

Underlying profit after tax, which removes the volatility of unrealised fair value movements, decreased 3.4 per cent to $3.7m. Net interest income rose 7.1 per cent to $25.8m.

The company said sales rose due to a number of factors "including a buoyant economy, record vehicle sales and the release of a non-recourse lending option to MTF originators".

MTF originators are made up of a network of 261 dealers that sell motor vehicles in conjunction with financial services, and 43 MTF franchises which only sell financial services.

The company said its market share rose to 12.9 per cent in the six months to the end of March versus 11.4 per cent in the prior period.

Its total assets increased 5.0 per cent or $31.6m on the back of significantly improved sales. Assets under management totalled $645m as at March 31.

Communication and processing expense increased 22 per cent due to targeted multimedia advertising campaigns, delivery of loan origination training and compliance programmes, and the provision of improved and more efficient technology, it said.

In November it announced a partnership with Turners Ltd to provide a non-recourse offering to its originators, which allows MTF franchisees and deals to sell vehicles to people with higher credit risk.

A pilot was launched in early December with a progressive roll out from January once the lessons from the pilot were applied.

The uptake has "significantly exceeded expectations" with sales exceeding $25m since December 1, it said.

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