NZF limiting new loans to $750,000

"This should ensure that significant loan impairment allowance movements and bad debt costs are restricted in future and ultimately result in NZF's property finance division returning to profitability," says chief executive Mark Thornton.

The division's $5.1 million in loan impairment and bad debt costs resulted in NZF Group reporting a $4.8 million net loss for the year ended March.

"NZF's experienced lending team continues to work with all of its borrowers to achieve recovery of all outstanding loans. Whilst there are still a couple of large property finance exposures that remain within NZF's loan portfolio, we believe that we have been prudent with our loan impairment allowance calculations," Thornton says.

NZF's home loans division's pre-tax profit fell 39.4% to $2.5 million in the year and Thornton says that was mainly due to changes in the Reserve Bank's official cash rate impacting the value of interest rate swap contracts and higher funding costs of its $100 million in securitised mortgages than the Westpac warehouse facility. The $84.6 million in secured notes on NZF's balance sheet relate to that securitisation last year which was the first in New Zealand since late 2007.