Heartland New Zealand, the country's newest bank, reported a 71 per cent slide in annual profit after booking charges to take control of distressed assets previously managed by Pyne Gould Corp.
Net profit fell to $6.9 million, or 2 cents per share, in the 12 months ended June 30, from $23.6 million, or 6 cents, a year earlier, the Christchurch-based lender said in a statement. That was in line with June guidance when Heartland said it was going to take an $18 million charge on writing down the value of loans and investments and to cover the risk of holding some of those assets over a longer time frame.
Stripping out the one-off impairment, adjusted profit rose to $24.4 million and revenue gained 13 per cent to 107.4 million. The bank affirmed its 2014 forecast for net profit of between $34 million and $37 million.
"The NPAT expectation for the next financial year reflects ongoing reductions in cost of funds, lower impairments, continued focus on cost reductions and asset growth in core assets in line with credit growth expectations," the company said.
The board declared a final dividend of 2.5 cents per share, with a September 20 record date, payable on October 4. That takes the total payout to 6 cents per share.
The shares were unchanged at 86 cents on Friday, and have gained 25 per cent this year. The stock is rated an average 'buy' based on three analyst recommendations compiled by Reuters, with a median target price of 86 cents.
The bank increased its retail and consumer loan book to $987.8 million as at June 30 from $989.4 million and its business segment assets to $549.2 million from $540.2 million. The rural loan book shrank to $456.6 million from $478.6 million, and the non-core property loan portfolio fell to $107.4 million from $160.2 million.
As at June 30, Heartland's total assets were $2.5 billion, up from $2.35 billion a year earlier, and its deposits were $1.84 billion from $1.63 billion.