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Investor Newsletter - March 2011

Welcome to our March 2011 General Finance quarterly newsletter. We appreciate your support. The purpose of this newsletter is to keep you informed about the company and various financial matters that may interest you.

Wholesale Interest Rates
On 10 March the Governor of the Reserve Bank reduced the Official Cash Rate (OCR) by half a percent from 3.0% to 2.5%. This was due to the likely negative economic effects of the earthquake in Christchurch and the fact that we are in a double-dip recession. This move has been anticipated and already our currency has depreciated a little, which will benefit our exporting sector. Those with mortgages will receive a benefit with lower mortgage rates. The Governor is hoping it will restore some confidence in the economy. The negative consequences are that bank term deposits especially in the short term area (up to a year) will decrease.  This is not good for many retired people who depend on bank interest for income but it will have little effect on finance company deposit rates. Our rates remain unchanged, which makes our 3 year rate at 9.25% particularly attractive. 

We Have Been Busy
On 1 December 2010, a number of changes were introduced to the Reserve Bank Act which required us to change our Trust Deed and reissue our Prospectus.  The new things included in the Trust Deed were:

  • The Company’s minimum capital ratio must not be less than 10%.  At 31 December 2010, the Company’s capital ratio was 82%.
  • The Company’s aggregate exposure to related parties must not be more than 15% of its capital.  The Company, as a matter of policy and practice, does not make related party loans. 
  • The Company may not permit the level of Liquidity to fall below 10% of Total Tangible Assets.  At 31 December 2010, the Company’s Liquidity was 26%.

As we had known about and been preparing for these changes for a while, they posed no difficulty for us.

Our current lending
Our lending over the past quarter has increased but we are still focusing on short term and bridging type loans with over 80% of our advances being first mortgages and only a very few well secured second mortgages being done.  All are secured over residential properties only. The banks are not particularly interested in this small segment of the residential market as they are long term lenders.  This is ideal for a residentially focused finance company such as ourselves. Our investors should feel a degree of confidence that we are operating in a secure and defined part of the market.

Interest rates
Our interest rates have been fairly constant for the past few months. Just to remind our investors, if you are looking at a rate above 8.0%, our two year rate is 8.25% and our three year rate is 9.25%. If you deposit more than $10,000 with us, you can have your interest paid monthly. This is a great advantage for those wanting a monthly regular income.

Next Interest Payment
Our next quarterly interest payment will be made on the evening of Thursday 31 March 2011. Direct credits will be processed that evening, with cheques (if applicable) and paperwork being forwarded during the week.

You should expect to receive withholding tax certificates for the 2010/11 financial year within the first few weeks of April.

If you have any questions about your investment please do not hesitate to contact me on 09 526 7801 or by email to  Our website is        

If you want to invest more funds, you can obtain an investment statement and application form from our securities registrar.  Their number is 0800 500 602.

Your continued support is noted and appreciated.