Heartland triples full-year net profit

Financial services group Heartland New Zealand, aspiring to become a bank, has tripled its full-year net profit to $23.6 million.

The result for the year to June 30 is up $16.5 million from $7.1 million the previous year, boosted by the acquisition of PGG Wrightson's loan book.

Most of that ($14.7 million) was earned in the second half of the year as the lender improved margins and reduced costs.

The result was also boosted by a one-off $3.4 million tax benefit relating to historic tax losses of Marac Finance – in addition to a previously reported one-off deferred tax benefit of $6.2 million.

Heartland, formed from the merger of Pyne Gould's Marac Finance with the Canterbury and Southern Cross building societies, expects to get the decision from the Reserve Bank in on whether it can have a banking licence in November..

Earnings of $20.2 million was in line with revenue guidance of $20 million to $22 million.

Net operating income grew by $3.7 million to $21 million and the lender says the current lending pipeline looks strong, with growth expected to continue into the the next financial year.

The lender's receivables book grew by $63.9 million to $540.2 million during the year.

And the rural loan book worth $478.6 million (the bulk of which came from the PGG Wrightson acquisition), has recorded a profit of $12.6 million on net interest income of $19.1 million.

"Whilst trading conditions remain challenging given economic conditions generally, Heartland expects a continual improvement in underlying performance in the year ahead," the company said in a statement to the NZX.

Heartland shares are trading at 56 cents and have gained about 10% this year.

No dividend will be paid. Heartland’s dividend policy will be outlined at the annual general meeting on November 2.

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7 Comments & Questions

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Was the profit up due to a tax credit?

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aaaaaaaaaa, yep.

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a one off 9.6 million dollar tax credit off 23.6 million dollar profit =14 million profit.
a good result

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some not convinced, going on share price.

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Im watching.
RBNZ has nothing to gain and a big reputation to lose.

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No dividend , so would expect year price to drift over coming months.

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Maracs toxic loans (not disclosed at the time of merger) will continue to dog this vehicle.

Kerrs exit from Heartland said it all. You cant hide lemons forever. Hopefully the SFO are onto this.

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