Heartland result much as forecast

HEARTLAND Bank delivered a mixed fullyear financial result in line with forecasts and at the upper end of company guidance, Forsyth Barr broker Suzanne Kinnaird said yesterday.

The profit before tax for the 12 months ended June was $94.3 million, up 12% on the $84.5 million reported in the previous corresponding period.

The reported profit was up 11% to $67.5 million from $60.8 million in the pcp.

Operating income was up 15% to $196.8 million from $171.3 million.

Ms Kinnaird said the result was boosted by oneoff gains on sales of $5.4 million. With that stripped out, the operating profit was 5.3% below expectations.

Heartland declared a secondhalf dividend of 5.5c per share, bringing the total dividend to 9cps.

Chief executive Jeff Greenslade said Heartland was look ing forward to continued asset growth in the year ahead, particularly in core markets of reverse mortgages, and motor and small business lending.

‘‘We also expect to see further growth from Australia, particularly in the growing reverse mortgages market.’’

The bank expected reported profit for the 2019 financial year to be in the range of $75 million to $77 million.

Funding and liquidity remained strong. Retail deposits grew $307.8 million, or 12%, to $2.9 billion in the year.

In September 2017, Heartland successfully completed a fiveyear, unsecured, unsubordinated, mediumterm, fixedrates notes offer. The final amount issued was $150 million at a fixed interest rate of 4.5%.

The group announced its intention to conduct a corporate restructure to provide it with a more suitable platform for growth, Mr Greenslade said.

As part of the restructure, Heartland was also seeking a foreign exempt listing on the ASX.

The board unanimously supported the proposed restructure and recommended shareholders vote in favour of the restructure at the annual meeting being held on September 19.

Mr Greenslade said the proposed restructure would remove constraints on the growth of the group’s business from Reserve Bank regulations and provide flexibility for the group to explore growth opportunities in New Zealand and Australia.

Heartland shares last traded at $1.73, down 0.6%.

❛ We also expect to see further growth from

Australia

Jeff Greenslade