GE Capital cuts debt, boosts profit to $149m

New Zealand's fifth-biggest lender, GE Capital New Zealand, said yesterday that its net profit rose by 29 per cent to $149 million in calendar 2011, mostly due to a reduction in bad debt and through cost control.

The company is involved in providing finance for customers of Noel Leeming and Harvey Norman, and has close commercial links with state-owned Kiwibank and online trading platform Trade Me.

GE Capital in New Zealand and Australia last year exited the home lending market when it sold A$5 billion worth of loans to Pepper Australia.

Yesterday's profit did not take into account a $15 million loss on the sale of its New Zealand home mortgage book and operating income fell by 4 per cent to $412 million, mostly reflecting its exit from home lending.

Alongside consumer finance, GE Capital is heavily involved in commercial lending.

It also has Custom Fleet, which operates New Zealand's biggest vehicle leasing fleet with the police as a major customer.

The company's loan impairments fell by 58 per cent to $33 million while costs were relatively flat. Consumer lending was up 18 per cent and commercial lending up 15 per cent.

Paul Dowling, principal analyst at Sydney's East and Partners - a banking research and advisory firm - said the result showed that GE Capital had "recalibrated" its business model over the past 18 months.

Last year, GE Capital launched its Gem Visa credit card, which has picked up 80,000 new accounts.

It also picked up parts of South Canterbury Finance's loan book in the form of Face Finance.

GE Capital NZ's managing director, Aaron Baxter, said the company would seek to grow its business "organically" but with an eye on acquisitions. He said GE Capital was going to position itself in what it defines as the midmarket - companies with turnovers between $2 million and $50 million.

The company also planned to be more aggressive in the agricultural lending sector and to take a more active part in businesses associated with rebuilding activity in Christchurch.