Margin pressure shows in Motor Trade result

By Phil Boeyen, ShareChat Business News Editor

Monday 3rd December 2001

Profit at Motor Trade Finances has dipped as a result of pressure on margins and higher expenses.

For the year ended September the auto finance services company has reported a profit of $34.6 million, down from $36.3 million last year. Income fell to $45.55 million from $47.33 million previously.

The company says insurance income was lower than expected, following a change of underwriter and in the face of strong competition.

"Pressure on margins and expenses higher by 5% contributed to the lower result," MTF said in a statement.

"The early part of the year saw disappointing volumes of new business and the year finished on a low note, following events in the US."

The amount of new business written was $350 million, a 1% drop on the previous year, however the company says the first two months of the new financial year have seen renewed confidence amongst dealers, resulting in above budget sales, ahead of last year by 12%.

Assets under administration rose 4.6% to $419.9 million at the end of the year and the business is boasting a strong financial position with a capital ratio of 60.9%.

"Credit quality has been maintained, with arrears at historic low levels. Net bad debt loss totalled $455,547 (0.1% of assets under administration), compared with $3,654 for the previous period, which saw exceptional recoveries from previous years," the company says.

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