"Marac's improved earnings for fiscal 2007 have benefited from sound lending volume growth, continued strong asset quality, and maintenance of its operational efficiency," Standard & Poor's credit analyst Craig Bennett says.

"However, the company's net interest margin was affected by higher funding costs and may progressively be affected by Marac's increased focus on better credit-quality lending."

S&P also reconfirmed its BBB- rating for South Canterbury Finance following the announcement of a 29% increase in pre-tax profit to $51 million in the year to June 30.

"The strong profit in fiscal 2007 was supported by good net interest margins on the back of strong loan growth of about 24% to $1.3 billion," S&P credit analyst Derrly D'silva says. He says the strong operating performance was underpinned by good operating efficiency and well maintained credit costs.

The rating agency also noted that "current disruptions caused by the failure of some finance companies, which are being placed in receivership or liquidation, may increase pressure on liquidity and growth in the broader market."

However, it noted Marac had a spread of funding sources including a recently established securitisation programme, bank lines and retail debentures which will enable the company to contend with the challenges.

It made similar comments about SCF noting its $150 million funding line from banks and the fact that about 9% of the company's balance sheet is represented by "liquifiable assets".