Heartland affirms FY guidance

Article – BusinessDesk

Heartland affirms FY guidance, sees consumer lending growth of up to 10%

By Paul McBeth

Oct. 31 (BusinessDesk) – Heartland New Zealand, the bank formed through the merger of Canterbury and Southern Cross building societies with Marac Finance, affirmed its earnings guidance for the 2015 financial year, and sees annual consumer lending growth of up to 10 percent.

The Christchurch-based lender expects profit of $42 million to $45 million in the 12 months ending June 30, 2015, compared to profit of $36 million in the 2014 year, chairman Geoff Ricketts told shareholders in Auckland. The lender is on track to meet that with first-quarter profit of $11 million, he said.

“For FY2015, the objective is continued growth through product development and acquisitions,” Ricketts said.

This week Heartland had its credit rating lifted to BBB by Fitch Ratings, its second upgrade of the year, due to the better quality of its assets, and the fatter margins on offer from its strategy to target niche lending.

Earlier this year the lender bought a reverse mortgage business from Seniors Money International for $87 million and took a 10 percent stake in peer-to-peer lender HarMoney as it seeks to accelerate growth.

Heartland anticipates modest lending growth in its business and rural loan books, with consumer finance lending expected to grow 5 to 10 percent, according to presentation slides accompanying chief executive Jeff Greenslade’s presentation. Lending at its consumer unit increased 2 percent in the first quarter, lagging a 4 percent gain in business receivables and a 6 percent increase in rural loans.

The bank is continuing to run off residential lending as it focuses on more profitable business, and expects to realise $10 million to $20 million from the sale of its non-core property assets, the slides show.

Heartland said the HarMoney investment aligned with its strategy to occupy leading positions in niche markets, and was a channel to attract customers in the household sector that it doesn’t currently reach.

The shares rose 1 percent to $1.01, and have gained 18 percent this year.


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