Investor Newsletter - March 2010

Welcome to our March 2010 General Finance quarterly newsletter. We appreciate your support. The purpose of this newsletter is to keep you informed about the company and various financial matters that may interest you.

Our Current Lending
This can best be described as just more of the same.  We are taking a prudent approach and virtually all of our lending is under 70% (of the security’s value), secured by residential first mortgages.  We are operating in a small niche, which is providing short term and business loans. The main trading banks take a more negative view on this type of lending due to its short term nature.  For us it is ideal - it is well secured and its short term nature allows us to turn our funds over. We are lending only on residential securities, which virtually everyone agrees are the most secure and liquid part of the property market. We have no plans to change our lending criteria. This has to be positive and good news for our investors.

Review of the Official Cash Rate
On 11 March the Governor of the Reserve Bank left the official cash rate (OCR) unchanged at 2.5%. The reasons for this are that the economy remains subdued, unemployment is at a 17 year high, building consents are down and credit card growth is sluggish. Business confidence appears to be improving but for all intents and purposes we are still in a recession. What is unusual is that we are a full 1.5% below Australia's overnight cash rate of 4.0%. This is why our exchange rate has been depreciating against their currency. This is positive for those exporting to Australia as this still remains our largest market. The earliest the commentators are suggesting that rates will start to rise is around the middle of the year. We believe, due to the state of the economy, that it may be later than this - around September. This is positive for those with mortgages but harder for those with funds to invest. Call deposit rates will remain low for sometime yet. One of the few areas investors can obtain a livable return, i.e. rates over 9.0%, is through a company such as ours.

The Non-Bank Sector
Over the past three years we have seen the demise of the non-bank sector which is not good in many respects.  By the non-bank sector we mean typically New Zealand owned and operated institutions such as finance companies, credit unions and mortgage trusts. Some were badly managed and deserved to go, at an unfortunate cost to their depositors. Our country needs this sector as these institutions tend to lend to businesses and this is where economic growth occurs. It allows another area for investors to access higher returns, apart from relying on much lower yielding bank deposits. As the non-bank sector shrinks, the productive sectors of our economy are being deprived of funds. Our aim, with your support, is to continue in our sector and grow as an active but careful lender of your money.

Interest rates
Interest rates have been edging up slowly over the past year. Just to remind our investors if you are looking at a rate above 9.0%, our three year rate is 9.25%. If you deposit more than $10,000 with us, you can have your interest paid monthly. This is a great advantage for those wanting a regular monthly income.

Next Interest Payment 
Our next quarterly interest payment will be made on the evening of Wednesday 31 March 2010. Direct credits will go in that evening, with cheques (if applicable) and paperwork being forwarded during the week.

You should expect to receive withholding tax certificates for the 2009/10 financial year within the first two weeks of April.

If you have any questions about your investment please do not hesitate to contact me on 09 526 7801 or by email to wcairns@general.co.nz  Our website is a www.general.co.nz.       

If you want to invest more funds, you can obtain an investment statement and application form from our securities registrar.  Their number is 0800 500 602.

Your continued support is appreciated.

May we take this opportunity to wish you a Happy Easter break.