Rating boosted

Heartland Bank has had its credit rating lifted by Fitch Ratings with the agency impressed by its improved asset quality and stronger earnings. Fitch raised the Christchurch-based lender’s long-term issuer default rating to BBB from BBB-, its short-term rating to F2 from F3 and its viability rating to BBB from BBB-. In a statement, it reports Heartland’s focus on niche lending markets – as opposed to residential mortgages – means it generates bigger net interest margins despite a riskier lending profile. It has also strengthened its loan book “by exiting non-core assets”. “Fitch expects core asset quality to remain sound, benefiting from strengthened underwriting standards and good economic conditions,” the ratings report says. “In addition, its capital ratios are adequate relative to its risks.” This is the second credit rating upgrade for Heartland this year after Standard & Poor’s lifted its rating to BBB in May. It cited the lender’s focus on niche markets with greater profitability. Heartland, which was formed from the merger of Canterbury and Southern Cross building societies and Marac Finance, this year bought a reverse mortgage business from Seniors Money International for $87 million and took a 10 per cent stake in peer-to-peer lender HarMoney as it seeks to accelerate growth. The company reported annual profit of $36m in the year ending June 30 – in line with guidance and on a 12 per cent increase in revenue to $122.6m.