Heartland meets guidance with rebound in full year profit, sees lift in 2015

Heartland New Zealand Managing Director Jeff Greenslade
Heartland New Zealand 12-month price history (NZX.com)

Heartland New Zealand [NZX: HNZ], the bank formed from the merger of Canterbury and Southern Cross building societies and Marac Finance, posted a rebound in profit that met its guidance this month and reiterated its projection for earnings growth in 2015.

Profit was $36 million in the 12 months ended June 30, from $6.9 million a year earlier, when the company took a charge to take control of distressed assets previously managed by Pyne Gould Corp. Sales rose 14 percent to $122.6 million.

Heartland has been chasing acquisitions to help grow earnings, buying a reverse mortgage business from Seniors Money International for $87 million and being turned down in its approach to Motor Trade Finances last month, which would have added a loan book of some $438 million.

The lender lifted the top-end of its forecast range for 2015 profit and now expects earnings of between $42 million to $45 million, up from a previous range of $42 million to $44 million.

"For the next financial year, Heartland is focused on continuing the earnings momentum achieved in 2014, with a specific focus on improving ROE (return on equity)," the company said.

The company will pay a final dividend of 3.5 cents a share, making 6 cents for the year, full-imputed.

The company paid $86.1 million for the Seniors home equity release business, gaining assets acquired and liabilities assumed of about $721.4 million and NZ$652.8 million respectively, and net tangible assets of $68.6 million. Heartland said it made a fair value adjustment of $7.5 million on the portfolio, giving the acquired business an NTA of about $61.2 million.

Net operating income from the company's household division rose 32 percent to $15.8 million, while income from its rural business was unchanged at $22.9 million. Its business lending division lifted income by 15 percent to $3.8 million.

The shares were unchanged at 95 cents and have gained 12 percent this year.


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