PGG Wrightson Finance gives upbeat forecast

PGG Wrightson Finance said on Monday it was confident of continued double-digit lending growth as competitors stepped back from lending and the farming sector continued to grow.

PGG Wrightson released results showing its loan book grew 14 per cent to $513 million in the year to December 31.

"The loan book has grown steadily at a double-digit rate month after month for the last three years," said Mark Darrow, head of PGG Wrightson Finance.

"With a strong financial and institutional base, we have been able to take a more flexible view on supporting clients through global cycles while retaining excellent credit quality. There is nothing we can see that will deflect that rate of growth in the next 12 months," Darrow said.

Core net interest income rose 34 per cent to $9.3 million in the six months to December 31 from the same period a year ago. Net profit almost doubled to $4.65 million. By December 31 the secured portion of the loan book was 97.9 per cent, with first land mortgages totalling 74.4 per cent and second land mortgages at 6.4 per cent. Fifty-five per cent of loans were to sheep or beef farmers.

Reinvestment rates in the debenture programme were around 80 per cent over the period. Undrawn bank facilities stood at $180 million at 31 December, following the successful renegotiation of wholesale credit lines with banks.

PGG Wrightson Finance said it was confident. "New Zealand farmers have a history of adjusting to difficult conditions and building stronger businesses over the long term," Darrow said.

"Current conditions are challenging, with reductions in some key commodity prices and short-term imbalances in supply and demand. There have also been areas of improvement - for example in the meat industry, where lamb producers are receiving significantly more than last season's poor returns," he said.

"On balance, we are cautiously optimistic that this environment will enable PGG Wrightson Finance to maintain its growth path."

- INTEREST.CO.NZ