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NZF writes down value of Mike Pero joint venture

NZF Group, which recently launched the country's first residential mortgage-backed securities in three years, has posted a full-year loss after it wrote-down the value of a joint venture with Mike Pero Mortgages.

Monday, 31 May 2010


The financial services company made a full-year loss of $4.6 million, compared to $3.4 million a year earlier, after it was forced to impair the value of its MPMH joint venture with Mike Pero Mortgage's by almost $7 million. Excluding the impairment loss, NZF turned around its operating performance to report a $3.4 million profit, from a $4.8 million loss in 2009.

Managing director John Callaghan said the impairment loss came from a reassessment of short-term growth rates and projections to its profitability due to changes in MPMH's KiwiSaver sales and marketing strategy following the global financial crisis, and had no cash impact.

NZF is looking to raise $100 million from institutional investors by securitising a chunk of its loan book in a bid to inject new funds into its mortgage business. Over the 12 month period, NZF boosted its home loans portfolio to $200.5 million from $174.1 million, and it said it will focus its lending on first mortgage securities, which make up about 96% of its loan book.

The financial institution reduced its total gross impaired assets to $11.8 million in the year, from $16.8 million, and more than halved its total past due assets to $12.6 million. Its property finance loan portfolio has been cut to $61.5 million from $84 million.

NZF increased its facility with Westpac to $225 million from $200 million, and extended its expiry date to Oct. 18 this year. It repaid its $40 million facility with Commonwealth Bank of Australia in February.

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