ANZ's UDC Finance growing strongly

New Zealand's largest equipment and vehicle financier, UDC Finance, has reported a 20 per cent increase in annual net profit after growing lending strongly into the forestry, construction and new car markets.

The ANZ-owned finance company (which is the only NZ$1 billion-plus finance company left after the collapse of most New Zealand finance companies during the Global Financial Crisis) reported a net profit of NZ$51.5 million for the year ended September 30.

Along with similar cost reductions by its New Zealand parent, UDC Finance said it reduced its cost to income ratio to 27.3 per cent during the year.

UDC Finance has taken advantage of record high new car and commercial vehicle registrations in the small to medium business sector in New Zealand over 2013 and 2014 as construction booms in Christchurch and Auckland encouraged many contractors to buy vehicles and construction equipment.

A surge in logging of forests for export to China also drove lending growth to fund new logging equipment purchases and vehicle sales. A crackdown on safety compliance by New Zealand's safety regulator also triggered extra equipment buying.

UDC grew lending 18 per cent to NZ$1.34 billion for the year, including forestry industry lending growth of 63 per cent, construction industry lending growth of 15 per cent, motor vehicle lending growth of 14 per cent and farm lending growth of 13 per cent.

UDC grew its market share in finance for new cars by 51 per cent as commercial vehicle sales hit record highs.

"Success in forestry has been driven by demand from China, and includes significant lending to fund mechanisation to boost production and safety," UDC Chief Executive Tessa Price said.

"Growth in truck sales also bodes well for the economy, reflecting a need for capacity to deliver to strong consumer demand," Price said.

"Business confidence fed by this ongoing strength in the economy is also seeing more firms deciding to go ahead now with purchases that were previously on hold," she said.