Instant Finance receives a B3 credit rating from Rapid Ratings
Personal finance retailer Instant Finance NZ Limited (IFNZ) has had its B3 investment grade rating reconfirmed by global corporate credit rating agency Rapid Ratings.
Friday, October 7th 2005, 10:32AM
Rapid Ratings noted that IFNZ is an established business with family associations going back some thirty years. Operational management of the business has been effective with the company specialising in personal finance delivered through a retail branch network.A B3 credit rating indicates that the company is operating at between 65 — 70% of its potential. A Credit Rating of B3 suggests that the business of Instant Finance NZ Limited is of reasonably good quality and that, with respect to the risk of non-payment of corporate debts and/or the degree of risk of insolvency, the company is a moderate risk and more subject to fluctuations in market conditions.
This is the second credit rating for IFNZ. It remains valid until September 2006 unless there is a material change in the company.
Rapid Ratings (RR) notes that, over all, IFNZ has achieving a very good set of financial results. It has a good record of profitability and is performing at a high level of financial efficiency. IFNZ has experienced solid growth in recent years, achieving 25% and 26% growth in total assets respectively in 2004 and 2005 and 22% growth in tax paid profits for the year ended 31 March 2005 (35% in 2004). Tax paid profits represented a return on average equity of over 43% for the year (57% in 2004).
Financial performance of IFNZ does need to be viewed against the strong performance of other finance companies, particularly those in the same personal financing business as IFNZ, the report says. New Zealand market conditions have been very favourable for finance company growth for several years but there is some evidence of a stalling of growth in the last half of the year which probably reflects a general slowing of the economy and already high levels of household debt.
This credit rating is based on a combination of (1) a software-based quantitative rating of B1 derived from running the financials of IFNZ through Rapid Ratings’ web-based global corporate credit rating service and (2) an extensive qualitative credit assessment process. A downwards adjustment of 2 points was required to be made to the quantitative rating to reflect the additional assessment undertaken during the qualitative credit assessment.
Rapid Ratings has offices in Wellington, Brisbane, Singapore, Toronto, London and New York and rates companies in New Zealand, Australia, Singapore, Canada, USA and the UK, providing ratings on about 15,000 listed companies.
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