Heartland lifts annual net profit 9%

Net profit for the 12 months ended June 30 rose to $73.6 million from $67.5m the previous year. Photo / Supplied

Heartland Group lifted annual net profit 9 per cent amid growth in its reverse mortgages, motor and business lending divisions.

Net profit for the 12 months ended June 30 rose to $73.6 million from $67.5m the previous year.

Lending growth overall rose 10.7 per cent, or by 424.8m, before foreign exchange adjustments with Australian reverse mortgages rising 24 per cent, or by $163m, New Zealand reverse mortgages up 11.4 per cent, or by $52m, and motor lending up 13.3 per cent, or by $127.6m.

Return on equity was unchanged from the 2018 financial year at 11.1 per cent but rose from 10.3 per cent in the first half to 12.2 per cent in the second half.

Net interest margin eased to 4.33 per cent from 4.42 per cent, reflecting the strong growth in lower margin reverse mortgages.

The company, which includes the New Zealand registered Heartland Bank and its separate Australian reverse mortgage business, says its strategic focus remains on niche markets where it aims to deliver either best or only products to depositors and borrowers.

Heartland will pay a final dividend of 6.5 cents per share, up 1 cent on the previous year's final dividend, taking the annual payout to 10 cents. The record date is August 23 with payment due on September 6.

The company says it expects continued asset growth this year, particularly in Australian and New Zealand reverse mortgages and small business lending while it continues a managed reduction in business and rural relationship lending.

While business intermediated lending grew 31.4 per cent, or by $101.7m in the year just gone but business relationship receivables fell by 16.1 per cent, or $107m, and rural relationship receivables fell 4.2 per cent, or $23.4m.

Heartland shares are down 1 cent to $1.61 and are up 3 per cent from a year ago compared with the benchmark S&P/NZX 50 Index's 21 per cent gain.