Heartland loan book reaches $4.22b

Peter McIntyre.
Peter McIntyre.
The loan book of dual-listed Heartland Group, which owns Heartland Bank, has topped more than $4.2 billion as it eyes up further strong growth in the $A6 billion ($NZ6.25 billion) reverse mortgage market.

For its half year to December, Heartland Group posted a 8.7% increase in operating income to $102.1 million and an after-tax profit boost of 6.5% to $33.1 million.

Between mid-2015 and December 2018, the overall loan book of Heartland Group rose from $2.87 billion to $4.22 billion, from its seven lending divisions.

The company said its Australian Reverse Mortgages division continued to see strong growth in the market, noting the number of Australians over 65 was projected to grow from 15% of the population to 23% by 2050.

Heartland plans to accelerate growth through raising product awareness under dedicated marketing initiatives ''to reach the total estimated [reverse mortgage] market of approximately $A6 billion'', the company said.

Craigs Investment Partners broker Peter McIntyre said the headline numbers were ''weaker than expected'' and the result was ''messy'', given a number of one-off costs associated with the corporate restructure and implementation of international financial reporting standards.

''The underlying loan book growth appears to be in line with previous periods,'' he said.

While full-year financial guidance was reduced, mainly because of one-off costs, second-half after-tax profit growth was implied by the new range of 9%-14%, which looked ''strong'', he said.

Earlier this month, the Australian banking Royal Commission delivered a scathing report calling for tougher regulation, making 76 recommendations to overhaul the industry in Australia.

Mr McIntyre said Heartland would be less affected than the Australian banks, as it did not have the same vertical integration or customer cross selling as Australian-owned New Zealand-based banks.

On the commission's report, or expected legislative response, Heartland said yesterday it expected no material impact on its business.

In New Zealand, the Heartland Bank division expected ''continued growth in core lending'' from New Zealand Reverse Mortgages, business lending, Motor Finance and lender Harmoney, the latter's loan book having grown by 44.3%, annualised.

''Like Australian Reverse Mortgages, there are significant growth opportunities for New Zealand Reverse Mortgages, and Heartland intends to continue to leverage off its success achieved to date in the New Zealand market,'' the company said.

simon.hartley@odt.co.nz

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