KEY POINTS:
Dominion Finance Holdings (DFH) today shrugged off "challenging times" for the sector to report a record net profit of $9.4 million for the six months to September 30, up 33 per cent on a year ago.
Chairman Rick Bettle said the result was very pleasing given the recent uncertainty for investors in the sector.
The profit was generated by the two operating subsidiaries, Dominion Finance Group Limited (DFG) and North South Finance Limited (NSF).
DFH, which said it had no related party lending, said it planned to secure a credit rating from Standard & Poor's by March 31.
Chief executive Paul Cropp said a rating was important for investors but not a saviour.
Shrugging off an environment which has seen investors shy from finance companies due to 10 collapses in the past 18 months, DFH said revenue rose 14 per cent on higher interest rates and fees.
Costs also rose 10 per cent.
The company is forecasting lower revenue in the second half as the ugly climate for finance companies bites.
However, Mr Bettle said profitability was good, "so we are looking at a 10-15 per cent increase in the net profit after tax result for the full financial year".
Although strong demand existed for loans, the negative investor sentiment in the market towards finance companies meant DFH companies did not take up many lending opportunities.
"New investment levels have been impacted by the current uncertainty and it is similar with the investment renewals.
"Due to the scarcity of funds available, our profit margin is good," Mr Cropp said.
A fully imputed interim dividend of 5.0 cents per share, up from 4.8 cents last year will be paid on November 16.
Mr Bettle said the DFH's focus was to maintain prudent liquidity for the months ahead.
DFH shares rose 8c, 5.3 per cent, to $1.60 after the result. The shares had dropped to 36 per cent in six months to yesterday as investors fled finance companies.
- NZPA
