Heartland sees flat profit in 2013, announces special dividend

Friday 30th November 2012 1 Comment

Heartland New Zealand, which expects to hear back on its banking licence application before Christmas, sees flat profit in the 2013 financial year, and has announced a pre-Christmas special dividend.

The Auckland-based lender told shareholders net profit will probably be between $21 million and $24 million in the year ending June 30, 1013 at today's annual meeting. That compares to annual profit of $23.6 million in the 2012 year.

That profitability represents a 45 percent to 66 percent improvement in pre-tax profit, and depends on asset growth, lower cost of funds from a successful bank registration, a focus on costs and charges on impaired assets staying at current levels, Heartland said in its AGM presentation published on the stock exchange.

The company's board also declared a 1.5 cents per share special dividend, with a record date of Dec. 14 payable on Dec. 21. Heartland's directors gave no details on future dividend policy, saying only that payouts would be based dividends on its after-tax profit, subject to maintaining a prudent level of capital.

"Heartland's capital needs will vary from time to time, depending on a range of factors (including regulatory and credit rating requirements, general economic conditions, current and expected growth and the mix of business)," the company said in a statement.

The shares rose 1.5 percent to 69 cents, and have rallied 43 percent this year. The stock is rated an average 'outperform', based on two analyst recommendations compiled by Reuters with a median target price of 65 cents.

Heartland was formed through the merger of Pyne Gould's Marac Finance unit with the Canterbury and Southern Cross building societies, with a view to securing a banking licence in a shift away from a new regulatory regime that imposed stricter conditions on non-bank financial institutions.

Last month Heartland had its investment grade BBB- credit rating affirmed with a stable outlook by Standard & Poor's, which cited the lender's strength as very strong capital and earnings assessment, good geographic and business diversity, and sticking to its timeline for its post-merger plan.

BusinessDesk.co.nz

Comments from our readers

On 30 November 2012 at 4:54 pm Max Percy said:

I believe the predictions made today at a shareholders meeting by the directors of Heartland is a fair and reasonable assessment. I am encoraged by the fact that the directors and those running the company have their feet placed firmly in the sand and are being transparent with their share holders on potential future earnings, growth etc. It appears to have a wekk thought out plan and is sticking to that plan. Thayt in itself gives me confidence in Heartlands future for growth and possible dividend payouts.