Marac Finance reported on Friday its first half profit slumped 45% to NZ$7.8 million after a deterioration in arrears in both property and consumer lending forced it to take NZ$9.3 million of bad loan charges. Marac's owner PGC had previously announced it would underwrite NZ$25 million worth of bad loans at Marac, although only NZ$13 million had been specifically allocated with NZ$12 million set aside as an unallocated collective provision. PGC had a strong balance sheet and the ability to reinvest dividends in Marac Finance should it need extra capital in the couple of years, said Marac Finance Managing Director Brian Jolliffe. PGC has indicated to the market that it would ultimately exit its stake in PGG Wrightson and had a clean balance sheet with little debt. This would help support Marac Finance as it moved towards becoming a listed bank, although now would not be the time to raise fresh equity through the stock market and the current market is not one PGC would sell into, Jolliffe told interest.co.nz in an interview. PGC also had a freehold office building in Christchurch and undrawn bank lines if extra capital was needed. See the full presentation to analysts and media here. * This article was first published on Friday in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.
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