2016 is lining up to be another good year for GPS. Low interest rates and poor performance in other investment sectors will assist deposit taking while minimal competition from other lenders will assist in maintaining a prudential loan book.
When times are good there is the temptation to engage in excessive growth of funds under management. Bruce and I have seen this all before. Our focus for 2016 is to look after the current investors, and limit growth of funds under management to sustainable levels. It is all about good prudential lending and consistent application of funds under management.
Growth at GPS will be directed to the ongoing rationalisation of the private lending industry, and generating greater backroom efficiency by improving technology, systems and culture. Our new operating platform is now up and running. The extensive suite of reporting has provided us with many new tools to further improve our ability to review new loans and to manage the loan book.
Operational costs continue to rise for the private lending industry. As an example ASIC has moved to a user pays model. This cannot be good news for us. If GPS and other private lenders do not work together on improvements and greater efficiency, then we will be faced with the mutually unpalatable alternatives of reduced distributions and profit.
I took support from comments made by Bob Joss (former CEO at Westpac and Dean of Stanford’s School of Business) in his interviews after he was honoured with a Companion of the Order of Australia where he discussed:
These are all part of the culture at GPS.
GPS has an abundance of new loans currently under review. We are now sorting through the huge influx of applications, and doing the due diligence, to bring you the best of the best – good, solid, traditional GPS deal. Stay tuned in the coming weeks for more information.