Heartland 1H profit meets guidance, flags annual earnings of up to $22 mln

Thursday 16th February 2012

Heartland New Zealand, the lender which took on PGG Wrightson’s finance book last year, hit its guidance for first-half profit, and said it expects annual earnings to go as high as $22 million.

Net profit was $9.8 million, or 3 cents per share, in the six months ended Dec. 31, the top of the $9 million to $10 million range it flagged in November.

Net interest income was $39.1 million, with the Wrightson book bolstering earnings and a lower cost of funding helping margins. Heartland expects economic conditions to remain challenging, with lower than expected lending, and its guidance depends on its business and rural units building on their first half performances.

The company, which was formed last year from the merger of Pyne Gould Corp’s Marac unit with the Canterbury and Southern Cross building societies, took an impairment charge of $3.8 million, while net impaired and past due loans over 90 days were $87.7 million, or 4.2 percent of net finance receivables.

“The level of impaired and past dues are due to the legacy of non-core property books of Marac, CBS Canterbury and Southern Cross, and will continue to reduce as a percentage of total assets as lending in the core business grows and the non-core book runs down,” Heartland said.

As at Dec. 31, Heartland’s total finance receivables were $2.08 billion, and it held $1.64 billion in deposits. Heartland said it is still in discussions with the Reserve Bank over its application for a banking licence, and can’t comment further.

The shares were unchanged at 48 cents in trading today.

No dividend was declared.

(BusinessDesk)

BusinessDesk.co.nz

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