Geneva Finance gets S&P rating

Thursday, 5 May 2005

Standard & Poor’s has assigned finance company Geneva Finance a ‘B+’ long-term counterparty credit rating and said its outlook is "stable".

"The counterparty credit rating on New Zealand-based finance company Geneva is limited by its small absolute size of capital, and small market position and developing business franchise, reflecting its start-up in 2002," S&P says.

Also moderating the rating is Geneva’s heavy reliance on debentures, which places greater reliance on its liquidity management capabilities.

“Positive factors include Geneva’s good earnings potential, benefiting from strong net interest margins, and good asset quality experience although Geneva’s loan portfolio is unseasoned and is exposed to a higher risk market segment that is highly competitive,” S&P credit analyst Craig Bennett said.

Standard & Poor’s views Geneva’s asset quality will not deteriorate materially from its present good level in the short to medium term, and that its earnings momentum will benefit from an expanding business profile.

"Although competition from larger market players may challenge the company’s market share and position, continued growth in loans is expected to place greater reliance on debenture funding and liquidity management capabilities.

"Comfort with Geneva’s small capital resources is subject to maintenance of its good credit loss record and continued earnings growth," the ratings agency said.

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