Motor finance boosts bank

Heartland Group has announced a net profit after tax of $95.9 million for the year to the end of June 2023, which was up by 0.8 per cent or $700,000 when compared with the previous year’s figures.

The result was described by the company as “pleasing amidst a challenging economic background in New Zealand and Australia”. 

It expects further improvement in the current financial year and has set net profit guidance for 2024 to be between $116m and $122m.

The latest results were boosted by receivables for Heartland Bank’s motor division increasing year-on-year by 13.5 per cent, or $186.68m, to $1.57 billion.

“Motor finance has experienced market share gains at the expense of margin, alongside general margin compression due to a shift in asset quality and competitive pressures,” the company notes.

“While total new and used car sales in the New Zealand market were down by 6.2 per cent in the period, Heartland’s new business volumes increased by 11.6 per cent from FY2022, with overall growth in FY2023 of 13.5% due to lower early repayments than expected.

“Heartland’s broad distribution network of dealers and partnerships with key distributors and large dealer franchise groups, along with its digital innovation, have been key contributing factors in achieving growth in a difficult market.”

The net operating income for the motor finance division was $64.2m, a drop of 11.9 per cent or $8.7m compared with the 2022 financial year.

Heartland says it intends to expand its branded online origination platforms to other dealer partners in the current financial year.

“Continued enhancement of motor finance digital capabilities will enable faster and easier access to vehicle finance for customers through online application platforms.”