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

 

Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>

ALSO:

Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>

ALSO:

Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>

ALSO:

Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>

ALSO:

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Houses (& Tobacco) Lead Inflation: CPI Up 0.3% In March Quarter

The consumers price index (CPI) rose 0.3 percent in the March 2014 quarter, Statistics New Zealand said today. Higher tobacco and housing prices were partly countered by seasonally cheaper international air fares, vegetables, and package holidays. More>>

ALSO:

Notoriously Reliable Predictions: Budget To Show Rise In Full-Time Income To 2018: English

This year’s Budget will forecast wage increases through to 2018 amounting to a $10,500 a year increase in average full time earnings over six years to $62,200 a year, says Finance Minister Bill English in a speech urging voters not to “put all of this at risk” by changing the government. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news