Heartland meets guidance with rebound in FY profit, sees lift in 2015

Monday 25th August 2014

Heartland New Zealand, the bank formed from the merger of Canterbury and Southern Cross building societies and Marac Finance, posted a rebound in profit that met its guidance this month and reiterated its projection for earnings growth in 2015.

Profit was $36 million in the 12 months ended June 30, from $6.9 million a year earlier, when the company took a charge to take control of distressed assets previously managed by Pyne Gould Corp. Sales rose 14 percent to $122.6 million.

Heartland has been chasing acquisitions to help grow earnings, buying a reverse mortgage business from Seniors Money International for $87 million and being turned down in its approach to Motor Trade Finances last month, which would have added a loan book of some $438 million.

The lender lifted the top-end of its forecast range for 2015 profit and now expects earnings of between $42 million to $45 million, up from a previous range of $42 million to $44 million.

"For the next financial year, Heartland is focused on continuing the earnings momentum achieved in 2014, with a specific focus on improving ROE (return on equity)," the company said.

The company will pay a final dividend of 3.5 cents a share, making 6 cents for the year, full-imputed.

The company paid $86.1 million for the Seniors home equity release business, gaining assets acquired and liabilities assumed of about $721.4 million and NZ$652.8 million respectively, and net tangible assets of $68.6 million. Heartland said it made a fair value adjustment of $7.5 million on the portfolio, giving the acquired business an NTA of about $61.2 million.

Net operating income from the company's household division rose 32 percent to $15.8 million, while income from its rural business was unchanged at $22.9 million. Its business lending division lifted income by 15 percent to $3.8 million.

The shares were unchanged at 95 cents and have gained 12 percent this year.

BusinessDesk.co.nz

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