Heartland profits increase
Heartland Bank reported an after-tax net profit of $29.1 million for the six months ending December 31, a 14 per cent increase from the previous corresponding period. The increase of motor-vehicle loans resulted in a rise in net receivables, but relatively low income growth in the vehicle finance market. One of the major movements was in household net receivables, which increased $106.1 million. Reverse mortgages increased $57.1 million, motor-vehicle loans $27.1 million and personal loans $29.9 million. Despite the growth in household net receivables, particularly consumer receivables, net operating income only increased one per cent over the reported period. This is mostly due to lower earning rates on motor-vehicle and personal loans. Heartland remained optimistic about continued growth of motor-vehicle loans, citing a lower costs and a competitive advantage over non-bank lenders in the vehicle finance market. The bank noted higher levels of early repayments for motor-vehicle loans, which helped drive the net interest margin down to 4.4 per cent. Impairment expenses, or diminishing asset values, in the household division has increased $2.2 million compared to the corresponding period. Heartland attributed this growth to higher write-offs in motor-vehicle loans, and a growth in personal and motor-vehicle loans. Impairments remain acceptable for motor-vehicle loans at 0.7 per cent. An interim dividend of 3.5 cents per share has been set by the directors, and will be paid on April 7.