Heartland Group chief executive Jeff Greenslade Photo: Supplied
Online financial services company Heartland Group has posted a flat full-year profit as lending slowed, margins shrank, and its costs and bad debts increased.
Key numbers for the year ended June compared with a year ago:
- Net profit $95.9 million vs $95.1m
- Net interest income $285.3m vs $250.1m
- Net interest margin 3.97 percent vs 4.16 percent
- Impaired asset expense $23.2m vs $13.8m
- Operating expenses $128.1m vs $116.7m
- Final dividend 6 cents per share vs 5.5 cps
The trans-Tasman finance company said the year had been challenging across Australia and New Zealand in the face of cost of living pressures and increasing interest rates, while bad weather and low commodity prices affected its rural customers.
Heartland group specialises in online personal, vehicle, small business, and mortgage lending, as well as specialist products such as reverse mortgages and livestock finance.
"In this environment, Heartland's asset quality has performed within expectations. Heartland has worked hard to support its customers, particularly those facing temporary difficulties due to the current economic environment," the company said in a presentation.
Its lending increased at half the rate of the previous year to $6.8b, while its net interest income rose nearly 18 percent, but its interest margins fell and costs rose.
The company increased its provisions for bad and doubtful debts by nearly two-thirds as it prepared for possible impacts from rising unemployment and arrears in car loans, and said it was no longer chasing unsecured personal loans.
Reverse mortgages remained strong earners, with double-digit growth on both sides of the Tasman, while there were increases in rural and business lending.
Over the past year Heartland consolidated its acquisition of an Australian rural lender and was in the process of getting an Australian banking licence as it took over the digital Challenger Bank.
The company said it would concentrate on its strategy of being the best or the only player in the segments it operated in, while looking to lower its cost of doing business through greater customer self service and digitalisation.
It gave a preliminary profit forecast for the coming year of between $116m-$122m, before one off costs.