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

 

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Igniting The Spark: Bringing The Digital Enabler To Life

Changing a name is, relatively speaking, the easy part of a re-invention. Changing a culture, getting all the ducks in a row, turning yourself inside-out to become customer-inspired is a much bigger challenge. More>>

ALSO:

Ebola And NZ: Targeted Screening At Airport But Risk Low

The risk of any cases of Ebola in New Zealand remains very low, but health and border authorities are well prepared... anyone arriving in New Zealand who in the last three weeks has visited countries affected will be screened for symptoms of the disease. More>>

ALSO:

Scoop Business: Brewer Seeking Crowd-Funding Cancels Shareholders’ Dividends

Shareholders in Renaissance Brewing company, the first business to seek equity through crowd-funding in New Zealand, have cancelled their claim on $147,000 of accumulated earnings “to make Renaissance a more attractive investment opportunity.” More>>

ALSO:

It's Spark Now:
Why Telecom Wanted To Change

New Zealand led the world when Chorus demerged from Telecom. It gave us a telecommunications industry structure where the network is completely separated from the products and services it delivers. The changes brought about a new market dynamic and it dramatically changed Telecom’s role. More>>

ALSO:

Glass Half Empty: Dairy Prices Fall To Lowest Since 2012

Dairy product prices slumped to the lowest level since October 2012 in the latest GlobalDairyTrade auction, paced by whole milk powder and cheddar. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news