Heartland Group has made a net profit of $72 million for the year to June 30 - a slight drop on its prior financial year.

The group, which includes Heartland Bank and a reverse mortgage business which spans both New Zealand and Australia, said its profit was down 2.2 per cent on its 2019 financial year.

The result beat analyst consensus which predicted a profit of $66.5m. Excluding an economic overlay the company put in place for Covid-19 its net profit was up 7.2 per cent to $78.9m.

Gross finance receivables for the business were up 4.9 per cent for the year to $4.6 billion while its net interest margin was flat on the prior year at 4.33 per cent.

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It operating expenses rose 24.5 per cent to $106.8m largely due to increased staff expenses after it hired 23 new people during the June quarter.

Heartland will pay a final dividend of 2.5 cents per share taking its total dividend for the year to 7c per share - a drop of 3c per share on 2019.

Whether the company would pay a second-half dividend was up in the air after the Reserve Bank stopped all registered New Zealand banks from paying out dividends earlier this year in order to bolster bank capital reserves in the face of Covid-19.

The group said the Covid-19 pandemic had created an uncertain economic environment for many of its customers.

As a result customers with $143m worth of consumer loans and $510m worth of business loans sought financial support which included payments holidays of one to three months, reduced principal and interest-only payments.

"Most of Heartland's customers have returned to pre-Covid-19 payment schedules. At 27 August 2020, 96 per cent of consumer loans and 98 per cent of SME and business loans were on usual (or pre-Covid-19) repayment schedules or had taken up Heartland Extend," the group said.

The bank launched Heartland Extend in May allowing customers the flexibility to manage the term of their loan to suit cash-flow needs.

Across all of Heartland's customers, at September 14, 1601 customers, representing $116.4m of loans, had taken up Heartland Extend.

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During the June quarter, Heartland had continued to lend approving $356m in new loans as well as 46 reverse mortgages in Australia.

Heartland chief executive Jeff Greenslade said it was quick to mobilise its employees to support customers despite alert level restrictions limiting occupancy in its places of work.

"Employees were provided with the appropriate systems, tools and resourcing to enable them to work remotely. Heartland redeployed employees to areas of the business experiencing high demand and brought on additional permanent and contract staff to meet customer needs."

But the group warned that considerable uncertainty remained and as a consequence it had created an economic overlay of 8.8 per cent of its net profit for the financial year.

Greenslade said Heartland did not have material exposure to the industries most profoundly affected by Covid-19 (tourism, hospitality, retail business) or the demographic most impacted by rising unemployment (15- to 24-year-olds).

In addition, its reverse mortgage business had shown resilience.

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Greenslade said taking into account Heartland's portfolio, management experience and future forecasts it had determined there was no reason to consider that its existing provisions were not adequate.

"Heartland recognises that its support arrangements and the significant government support mean that traditional indicators of increased credit risk may not provide an accurate measure of credit quality.

"Against that backdrop, Heartland has taken an economic overlay of $9.6 million pre-tax to allow for the uncertainty created by Covid-19."

The overlay did not represent actual or current losses but provided a buffer against future losses that the uncertainty may give rise to, he said.

Including the overlay its impairment expense increase by 42.3 per cent to $29.4m.