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UDC deposits fall as ANZ reviews ownership

NZ Newswire logoNZ Newswire 14/12/2016 Paul McBeth

<span style="font-size:13px;">UDC Finance's deposits have fallen as the question mark hanging over ANZ's ownership saw a reduction in investments.</span> © Getty UDC Finance's deposits have fallen as the question mark hanging over ANZ's ownership saw a reduction in investments. UDC Finance's deposits shrank in the latest financial year as the question mark hanging over ANZ's ownership of the country's biggest finance company saw a reduction in investments by external advisers.

The Auckland-based non-bank deposit taker's debenture funding shrank to $1.59 billion as at Sept. 30 from $1.74b a year earlier, reducing its share of deposits among finance companies to 57 per cent from 61 per cent a year earlier.

At the same time, UDC's loan book expanded 9.6 per cent to $2.57b, helping generate a record profit of $58.3 million.

The finance company funded that credit growth by increasing its use of a $1b facility with parent ANZ, drawing down $595m as at Sept. 30 from $280m a year earlier.

ANZ has been reviewing its ownership of the finance company this year, which triggered Standard & Poor's to downgrade UDC's credit rating to A- from AA-.

NZX-listed Heartland Bank has indicated an interest in buying UDC, though the Australian Financial Review's Street Talk column last week reported ANZ was likely to announce a sale to China's HNA Group before its annual meeting on Friday.

The finance company holds the highest credit rating among its deposit-taking peers, with Liberty the only other NBDT with an investment grade rating at BBB.

UDC is currently offering 3.6 per cent for a 12-month term deposit, sitting in the middle of the pack among other finance companies. However, longer duration terms are largely lower than UDC's peers.

UDC lifted debenture stock at call or within three months to $632m as at Sept. 30 from $604.3m a year earlier, while facing declines across longer terms.

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