Heartland Bank has boosted its profits by 12.5 per cent to $54.2 million and says it is still on the acquisition trail.

The local bank announced its full year to June 30 profit result this morning and said the increase was driven by growth across its lending book and lower funding costs.

Its households division lifted net operating income 12 per cent to $86.1 million as auto lending grew 9.5 per cent, personal loans - including those through the Harmoney platform jumped 55 per cent, and reverse mortgages increased 8.2 per cent in New Zealand and 10 per cent in Australia.

The unit's loan book was $1.69 billion as at June 30.


Heartland's business banking increased net operating income 5.4 per cent to $43 million with assets of $907 million, and its rural division boosted income 9.6 percent to $26.3 million on $552 million of loans.

At the same time the bank's impairment expense rose to $13.5 million in the 2016 year from $12.1 million in 2015, largely due to the increase in personal and motor vehicle loans and an increase in the number of auto loan write-offs.

It also increased its provisioning for potentially bad rural loans to provide a buffer against the dairy sector, with dairy farms accounting for 7 per cent of Heartland's total loan book.

The bank is expecting another good year ahead and is forecasting a net profit of between $57m and $60m in its 2017 financial year.

"Heartland expects underlying asset growth to continue for the 2017 financial year, with increased household, business and rural volumes projected."

Heartland has been on the hunt for new acquisitions to accelerate its expansion.

It made an unsuccessful bid for Motor Trade Finance and was mooted as a potential bidder for Australia & New Zealand Banking Group's UDC Finance business.

The lender has been considering a capital return to shareholders, but says volatility in financial markets "creates greater opportunity for acquisitions."

"Heartland continues to focus on assessing acquisition opportunities (if any) as they arise, and continues to monitor its capital position."

See a full presentation from Heartland here: