Jeff Greenslade, CEO of Heartland NZ
Heartland Bank’s profit rose 14 per cent to $29.1 million according to the company’s latest interim report published this afternoon.
The increase in profit was driven by strong growth across the household, business and rural divisions of the bank. Net finance receivables grew $221 million, or seven per cent, in the six months ending December 2016, which in turn resulted in a seven per cent growth of net operating income, valued at $5.3 million.
Earnings for the half-yearly period delivered an annualised return on equity of 11.6 per cent, which is 0.5 per cent high than the previous financial year.
The increased returns means the Heartland Board has declared an interim dividend of 3.5 cents per share. In total, share prices have risen 40 per cent in the last 12 months to $1.61.
Operating costs were down $1.1 million to $36 million, reflecting a five per cent drop in cost-to-income ratio to 43 per cent when compared to the previous corresponding period.
Higher write-offs in the motor-vehicle loan books and a growth in personal and motor-vehicle loans saw a $1.3 million increase in impaired asset expenses, up to $6.9 million for the half-year.
Funding and liquidity remains strong, with retail deposits growing $229.8 million to $2.5 billion in the first half of the 2017 tax year.
Heartland’s household division, which includes motor-vehicle loans, personal loans (including funds lent through the Harmoney platform), reverse and residential mortgages, performed strongly in the six months ending December 2016. Net operating income rose 7 per cent compared to the previous period.
Net motor-vehicle loan receivables continued to grow, up four percent to $794.5 million. Heartland remained optimistic about the growing motor-vehicle loan market in the report.
Meanwhile, net operating income for the business division grew nine percent, with net receivables increasing five per cent to $947.5 million during the six-monthly period.
The Open for Business platform saw particularly healthy results, up 142 per cent to $27.3 million.
The rural division alsoa saw an increase in net operating income, up six per cent from the previous corresponding period. Net receivables grew 12 per cent to $616.8 million, with growth attributed to term loans to existing and new customers across the sector.
The bank expects end-of-year net profit after tax to be at the upper end of their previous forecast of $57 to $60 million. The current financial year ends on June 30.