The proposed Heartland bank company is forecasting after-tax profit this year up to $8 million - despite one-off merger costs - and potentially a profit tripling to up to $24 million next financial year.
The positive news has not surprised analysts. In yesterday's trading update, which carried no other financial details, Heartland said it expected to deliver its full-year to June result by August 19.
In late July, Heartland announced it would seek an extra $3 million to take its overall capital raising to $58 million, which will to go towards the $100 million purchase of listed PGG-Wrightson's rural loan book, valued at up to $430 million.
Heartland was formed in January after the $2.2 billion merger of the Canterbury Building Society, Marac Finance and the Southern Cross Building Society and wants to apply for a banking licence this year.
Craigs Investment Partners broker Peter McIntyre said given the one-off merger costs, Heartland's estimated $6 million to $8 million after-tax profit guidance, released yesterday, would be a "reasonable result".
It had no more "one-off costs to absorb" next financial year - its forecast profit range being $20 million to $24 million - and Mr McIntyre expected the former PGG finance division to be a "significant contributor" to the final figure in 2012.
"The finance division was a significant contributor to PGG's bottom line, and will be for Heartland," Mr McIntyre said. Heartland has said in the past its rural lending portfolio would increase from about 6% of its book to about 21% with the PGG acquisition.
Shares in listed Heartland have been around 62c-63c recently.
Heartland also announced yesterday it would establish a Heartland employee share plan and it would give subsidiary Heartland NZ Trustees Ltd a $1 million cash settlement by mid-August to enable the subsidiary to acquire shares for the employee plan.
