Heartland Bank lifted third-quarter profit 11 per cent on continued lending growth and said it expects annual earnings to be at the upper end of its previously advised range of $65 million to $68m.

The Auckland-based lender generated a profit of $17.5m in the quarter, taking net profit to $48.6m in the nine months ended March 31, up from $44.9m a year earlier.

"While growth has been maintained overall, Heartland's strategy has been to grow those areas which are core to future growth, including motor, reverse mortgages, small business, livestock and personal lending. This has meant a reduced focus on larger business and rural relationship lending which, as a result of some significant repayments, has reduced the net growth in receivables for business and rural," it said.

According to the bank, net finance receivables stood at $3.9 billion as at March 31, versus $3.6b as at June 30, which equates to 13 per cent annualised growth.

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Heartland also said it saw a continued strong net interest margin of 4.49 per cent in the three months to March 31, bringing the net interest margin to 4.43 per cent for the nine-month period, which is consistent with the half year.

Non-performing loans improved to 1.7 per cent of gross receivables as at March 31 compared to 1.8 per cent as at June 30.

The bank said that news that the Australian government is extending the Pension Loans Scheme, an income supplement reverse mortgage, is "not expected to have an impact on Heartland's business, with demographics overwhelmingly positive for continued growth in demand."

While the changes increase the eligibility of the scheme, according to Heartland, it remains an income supplement with no ability for a lump sum drawdown.

According to the bank, its Australian business Heartland Seniors Finance provides a full reverse mortgage product with additional features, including the ability to draw on a lump sum. It also includes the option of a Cash Reserve Facility for future needs, something not available in the PLS.

Heartland said the changes may actually "result in increased awareness and greater acceptance of reverse mortgages."

The shares rose 1.2 per cent to $1.75 and have dropped 17 per cent this year.