Heartland Bank is still seeking Reserve Bank approval for bank registration, something that will decide its future, brokers say.
Heartland was formed in January last year by the merger of Marac, CBS Canterbury and Southern Cross Building Society. PGG Wrightson Finance was subsequently acquired last August.
Heartland chief financial officer Sean Kam said yesterday the making of any formal application was subject to Heartland being satisfied it had met all requirements of the Reserve Bank.
"The process through to formal application is of indeterminate length," Mr Kam said.
"As the discussions with the Reserve Bank are confidential, Heartland is not able to comment further as to timing or criteria."
Craigs Investment Partners broker Chris Timms said the market was waiting to see if Heartland got its banking licence.
Being a bank would give Heartland "far more credibility" in the marketplace, funding costs would be reduced and the company would have to meet the Reserve Bank's requirements for the Banking Act, he said.
"They are keen to be a bank and there is some public awareness around that issue," Mr Timms said.
Heartland announced a reported profit of $10.2 million for the six months to December, up $7.6 million compared with the $2.6 million for the six months to June. The result included a deferred one-off tax benefit of $6.2 million and four months' results of PGG Wrightson Finance.
Mr Kam said while the accounts showed an improvement in profitability, the period under review remained one of transition, making like-for-like comparisons with previous periods difficult.
The balance sheet strengthened during the period at the same time as the company successfully moved out of the Crown guarantee period.
In a review of Heartland's core divisions, the business division's receivables book grew by $43 million to $519 million during the six months.
Momentum slowed in the latter part of the period with activity around the Rugby World Cup and general election appearing to reduce lending opportunities and inquiries, he said.
By contrast, pipeline business and new business opportunities were back to pre-World Cup levels.
The PGG Wrightson Finance acquisition underpinned growth in rural net receivables from $76 million at June 30 to $466 million at December 31.
Asset growth was affected by seasonal influences, in particular livestock. Strong inquiries for new business and new products would help consolidate the rural division's position, Mr Kam said.
Net receivables fell by $23 million from $1 billion at June to $979 million at December in the retail and consumer division.
The mortgage book continued to be affected by Earthquake Commission repayments following the Christchurch earthquakes.
Growth in market share in consumer lending had occurred in a soft market.
The property market remained difficult and Heartland would continue to manage down the level of its remaining property assets on a timely basis, he said.
Mr Timms said economic conditions remained challenging for Heartland and the company achieving its guidance was predicated on a recovery in its rural division and a second-half continuance of the business division's first-half performance.
