Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Heartland posts 1H profit in line with forecast

Heartland posts 1H profit in line with forecast, eyes future acquisitions for growth

By Tina Morrison

Feb. 25 (BusinessDesk) – Heartland New Zealand, which gained a banking licence just over a year ago, posted first-half profit growth in line with its forecast and said increased rivalry in business and rural lending was “challenging” though household lending growth looked strong.

Christchurch-based Heartland said net profit rose 56 percent to $16.7 million in the six months ended Dec. 31, in line with its $16.5 million forecast. Profit lagged First NZ Capital’s $17.5 million estimate. Revenue rose 14 percent to $59.1 million.

Heartland, formed from the merger of Canterbury and Southern Cross building societies and Marac Finance, said the transformation of its balance sheet is on track as it exits non-core property loans, high risk assets and lending which competes with mainstream banks. The company aims to speed up earnings growth through acquisitions, and said today it continues to investigate potential acquisition targets after this month agreeing to pay $87 million for a reverse mortgage business.

The company said it has established a specialist team to target acquisition opportunities and develop new products, as it aims to accelerate earnings growth in areas without mainstream competition. Heartland said it has successfully integrated five businesses and developed new products over the last four years.

Shares in Heartland rose 1.1 percent to 91 cents, and have advanced 5.9 percent this year. The stock is rated an average ‘hold’ according to analysts polled by Reuters.

“Heartland expects asset growth to remain challenging given increased competition in the business and rural sectors,” the company said in a statement. “However growth in ‘households’ through both motor vehicle and home equity release products looks strong.”

Heartland expects its net finance receivables to expand to $2.7 billion in the current financial year ending June 30, from $2.1 billion last year, it said today. It expects to shrink its lending on non-core property assets to $48.6 million from $107.3 million, reduce the number of loans which compete with main banks to $449.4 million from $573.2 million and boost the amount of specialised lending which faces little competition to $2.24 billion from $1.39 billion.

Net operating income from retail and consumer lending rose 24 percent to $30 million in the first half as the unit benefited from lower cost of funds and increased revenues. Heartland reduced its retail and consumable loans and increased its motor vehicle lending during the period in line with its strategy to realign its product mix to areas where it can get a better return.

Income from business lending increased 17 percent to $14.7 million reflecting lower cost of funds and increased rivalry from other lenders.

The company’s rural income advanced 5.2 percent to $12.1 million driven by lower cost of funds off-setting reduced revenue on fewer receivables as it exited some loans it acquired from PGG Wrightson which were deemed to be higher risk or competing with major banks.

Heartland reduced its legacy non-core property assets by 19 percent to $87.1 million at Dec. 31 from six months earlier, in line with its expectations.

The company will pay a 2.5 cent dividend on April 4, up from 2 cents a year earlier.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news