Kerry Finnigan. Photo / Kenny Rodger
On the eve of being bought out by an Australian investment firm, private funder Strategic Finance said it had increased its half-year profits largely due to rising loan demand.
Strategic, about to be sold to ASX-listed Allco, made $13.1 million in the half-year to December 31, up on
$12.3 million previously.
Kerry Finnigan, Strategic's chief executive, attributed the firm's rising profitability to more demand for loans, particularly in provincial areas and for tourism ventures.
"Lending activity in regional parts of New Zealand is considerably stronger than in the main centres," Finnigan said. "We are also seeing strong growth in the buoyant tourism sector where the company has involvement in several hotel and resort developments."
The thriving economy had also helped Strategic, he said, because borrowers showed confidence in the country and the firm was receiving a rising number of inquiries for both investing and borrowing.
But collapses in the finance sector last year had made many people more discerning, Finnigan said.
Strategic raises money via debentures and issues loans, largely to the property sector.
Allco issued an ASX notice last week saying it aimed to complete the Strategic purchase by this Friday. Allco bought half of Strategic last year.
Strategic's loan book is almost entirely devoted to property. Of the $493.4 million it has loaned, only $2.4 million is not in the property sector.
Strategic has $192 million loaned to provincial areas, $187 million in Auckland, $88 million overseas including Fiji, $19 million in Wellington and $8.8 million in Christchurch.
Most of its loans are in the residential housing sector which comprises $326 million, followed by commercial property, $80 million, tourism property, $80 million, and industrial property, $6 million.
Strategic will pay shareholders a special dividend before the Allco sale but it did not declare how much would be paid.
