Mike Pero changes model and looks to expand

Mike Pero Mortgages has announced plans to establish a national risk insurance business, and sees strong growth in its core business in the current 2005/06 year.

Wednesday, November 2nd 2005, 9:56PM

Mike Pero Mortgages chairman George Gould told shareholders at the company's annual meeting in Christchurch the trading surplus in the three months to September 30 was well ahead of the same period last year.

For the year to June 30, 2005 MPM's net surplus after tax was $1.617 million.

"In fact we expect the net surplus after tax for the year to June 30, 2006 to be satisfactorily ahead of the year under review, and the outlook is therefore positive."

Gould said in the coming year the MPM broker network would be extended to regional areas.

"The size and extent of the broker network is the most obvious and immediate way to increase our earnings."

MPM chief executive Jeff Staniland said in the last year MPM had launched five new franchises and now had 41 and the number of brokers totalled 51.

The company was now changing its model from the position where only one broker who owned the franchise could operate it.

"We've extended that model and given these people the opportunity now to take on what we call a loan monitor - particularly to we hope clone themselves. So ... not bringing new people in and growing them but helping the established people grow," he said.

Staniland said over the financial year MPM's average monthly number of loans had been maintained during a time of declining sales volume in the housing market.

"The housing market in the last financial year did decline ... so some of our (loans were) effectively market share growth."

He added average loan sizes had increased. Gould said mortgage deal sizes and volumes were up offsetting any losses from the removal of trail payments by many of the banks or lending institutions.

"In the main they're not paying it but what they are doing is paying more upfront commission. So that has quite an implication on the earnings projection moving forward. It is probably seen as a negative influence but is actually very positive in the short term if you imagine getting more money upfront."

Gould said MPM had looked at acquisition opportunities "but nothing has quite measured up".

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