Key Facts at a Glance
- Is a registered Financial Services Provider and is licensed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).
- It is New Zealand’s most prominent branch based personal loan provider.
- Loans generally needs based e.g. assistance to pay bills, meet the cost of a wedding or funeral or to cover travel costs in a family emergency.
- Loans primarily for bill payments, purchasing motor vehicles and debt consolidation.
- Instant Finance is in some situations the difference between survival and failure for many of its customers and their families. Instant Finance is always there when they need help.
- Commenced business in 1971 – 47 year trading history.
- Brand supported by circa $3 million per annum marketing spend.
- 26 retail branches – branches in Kaikohe, Whangarei, Hamilton, Rotorua, Tauranga, Hastings, Napier, Whanganui, Palmerston North, New Plymouth, Dunedin, 2 in Christchurch, 10 branches in Auckland and 3 in Wellington.
- Warehouse facility in Manukau, retail car yard in Manukau and administrative centre in Greenlane.
- Over 20,000 active loans.
- Around 33,500 customers party to a current loan.
- Net loan receivables $90 million as at 31 March 2016.
- Average loan size around $4,500.
- Average term to run existing loans – approx 20 months.
- Number of loans written per week averages over 500 and in December up to 800 per week.
- $112.9 million advanced in twelve months ended 31 March 2016.
- Online applications average 320 per week – more than 18,000 applications received during the 12 months ended 31 March 2016.
Strength and Quality Measures
- Shareholder equity at 31 March 2016 $32.0 million – ($44.0 million including redeemable preference shares on issue).
- $12 million in redeemable preference shares were issued in December 2012.
- Strong inwards cash flows – almost all loans are on both principal and interest repayment basis with the majority repaying either weekly or fortnightly.
- As at 31 March 2016:
(a) Unearned interest income $25.7 million
(b) Unearned fee income $2.2 million
(c) Doubtful debt provision $3.8 million
- $65.0 million committed funding line from Westpac Bank.
- Loyal customer base with many 3rd generation family members.
- Around 90% of loans covered by payment protection insurance.
- Instant Finance continues to record historically low levels of loan arrears and bad debts, reflecting its commitment to responsible lending practices.
- 158 FTE (including Easy Driver and MYHome).
- Average length of service 6 years. 45% of staff have more than 5 years service.
- Average length management lending experience 12.8 years.
- Low staff turnover by industry standards.
- Company aspiration to be “Industry Employer of Choice” – significant focus on training and individual personal development.
- External training with focus on Health & Safety such as robbery awareness and first aid.
- Wholly owned subsidiary Easy Driver Ltd is a registered motor vehicle trader.
- Retail car sales operation based in Manukau provides cars that Instant Finance customers can realistically afford.
- Comprehensive one year “Easy Drive Warranty” introduced in October 2009 as traditional 3rd party extended warranties not working in customers’ favour. New warranty basically covers everything with few strings attached.
- More than 520 retail units sold during the twelve months ended 31 March 2016.
- Retails a range of furniture, home appliances, mobile phones and computers through branches.
- Finance available from Instant Finance at time of purchase.
- Sound lending guidelines developed over many years of experience.
- Branch network forms the core of Instant Finance’s “Face to Face” personal lending model. Instant Finance is not an “anonymous lending institution”.
- Every lending assessment made on the basis of customers affordability, security, customer stability, customer history and an overall assessment of the customer. Experienced staff assess the overall risk associated with the lending decision.
- Budgets completed and loan amounts closely matched to the customer’s ability to repay.
- Most loans structured with weekly repayments so that small, regular amounts are being paid by the customer.
- Company representatives visit the customer’s home to assess and complete valuation of security.
Governance and Risk Management
- Board of 6 includes 2 independent directors and one representing minority shareholders.
- Independent Chairman and Audit & Risk Committee Chairman
- Board sub-committees comprised of:
1. Audit and Risk
- External auditors – PricewaterhouseCoopers.
- Robust internal audit process.
- Fortnightly risk management meetings ensure regular review of lending across the branch network and closely monitors loan quality trends:
1. Loan activity and statistics i.e. loan size, loan term and a range of key indicators.
2. General branch activity e.g. transactions outside standard parameters.
4. Statutory compliance – Legal, Health and Safety, CCCFA, complaints, upcoming legislation etc.
- Conservative internal prudential ratios.
- Minimal related party lending.
- Instant Finance could comply with Reserve Bank NBDT capital adequacy and other requirements.
- Member of Financial Services Federation – CEO 19 years FSF service.