Heartland Group posts $47m half-year profit

Financial services company Heartland Group's bottom line has grown on the back of increased lending and higher margins.

Key numbers (for the six months ended 31 December 2021 vs year ago)

• Net profit: $47.5m vs $44.1m
• Revenue: $130.7m vs $125.3m
• Net interest margin 4.30pct vs 4.28pct
• Expenses $57.3m vs $61.1m
• Dividend 5.5cps vs 4cps

The company, which specialises in online consumer and business finance and reverse mortgages, said it had managed to grow its business despite ongoing pandemic-related disruptions, rising interest rates and the higher cost of labour.

"As in previous periods, the impact of the pandemic has not disrupted business as usual activity, noting that the demographics most affected by Covid-19 are under-represented in Heartland's customer base."

It said although it had not tapped into the $9.6 million set aside to cover bad and doubtful debts it was not planning to release the money due to ongoing uncertainty linked to the pandemic.

Heartland's lending rose nearly 14 percent to $5.4 billion over the period, with net income rising and net interest margins rising also.

Its strongest growth was in its reverse mortgage sales in New Zealand and Australia, vehicle lending, and digital home loans.

Operating expenses fell more than 6 percent to $57.3m but excluding one-off gains, underlying operating expenses were 2.5 percent higher on a year ago due to more spending on its IT systems.

The company said recent changes to the Credit Contracts and Consumer Finance Act had led to a slowdown in motor and home loans growth over January and February.

It warned this could hamper earnings for the rest of the financial year but would be partially offset by growth in its reverse mortgages business in Australia and New Zealand.

Heartland was among other financial services companies engaging with the government over the impacts of the new lending requirements.

Heartland reaffirmed its full year profit forecast to be between $93m and $96m.