Banking and financial services group Heartland Group Holdings has reported a 9% rise in after-tax profit to $73.6 million for the year to June. The result's in line with forecasts from the company.
It's paying a final dividend for the year of 6.5c a share, up 1c on the same time a year ago, while the forecasted profit for the year ahead is in the range of $77 million to $80 million.
The company says it expects to see continued asset growth from core lending activities in FY2020, particularly in Australian and New Zealand reverse mortgages and small business lending, combined with the continuation of "a managed reduction in Business and Rural relationship lending".
"Investment in growth will be made to build awareness for reverse mortgages (in Australia and New Zealand) and O4B [Heartland's online business lending operation], and to increase processing capacity in the areas of new growth.
"Some of these costs are anticipated to be one-off and will contribute to growth beyond FY2020.
"Additional investment is also planned in Finance and Compliance reflecting increased regulatory requirements and heightened demands in these areas."
In the past year Heartland says net operating income (NOI) was $205.8 million, an increase of $8.2 million (4.6% growth). Heartland’s net interest marging (NIM) for FY2019 was 4.33% compared to 4.42% for FY2018.
"NIM was impacted by the proportional changes in Receivables, in particular the strong growth in reverse mortgages which has a lower NIM relative to other products (but with correspondingly lower impairments). NIM was impacted by $1.1 million of break cost incurred due to the early repayment of the Tier 2 Australian dollar subordinated bond. Excluding these costs, NIM was 4.35%."
Operating costs were $85.6 million, an increase of $5.1 million (6.4% growth). Higher operating expenses were due to growth, one-off corporate restructure and ASX listing costs of $1.8 million and one-off foreign currency costs of $1.3 million also incurred in relation to the corporate restructure the company had during the year.
The cost to income ratio increased to 41.6%, compared to 40.9% in FY2018. However, the company said excluding oneoff costs related to the corporate restructure and the ASX listing referred to above, the cost to income ratio was 39.9%.
Some of Heartland's listed achievements in the past year included:
- Gross Finance Receivables (Receivables) $4.4 billion, up 10.5% (excluding the impact of changes in foreign currency exchange rates).
- Net profit after tax $73.6 million, up 9.0%.
- FY2019 Final Dividend 6.5 cents per share (cps), taking FY2019 total dividends to 10.0cps. A 1.0cps increase on FY2018, up 11%, and a dividend yield of 8.6%3.
- Return on equity (ROE) 11.1%, unchanged from FY2018.
- Earnings per share (EPS) 13.0cps, unchanged from FY2018.
- Net interest margin (NIM) 4.33%, down 0.09% from 4.42%.
- Net operating income $205.8 million up 4.6%.
- Cost to income ratio 39.9% (excluding costs associated with the corporate restructure), improved from 40.9%.
- New Zealand Reverse Mortgage Receivables increased $52.0 million (11.4% growth excluding the impact of foreign exchange and transfers).
- Motor Receivables increased $127.6 million (13.3% growth).
- Harmoney and other personal lending Receivables increased $45.1 million (24.9% growth excluding the impact of foreign exchange).
- Business Receivables increased $38.1 million (3.5% growth), with Business Intermediated lending up $101.7 million (31.4% growth) and Open for Business lending up $43.4 million (48.2% growth).
o Australian Reverse Mortgage Receivables increased $163.0 million (24.0% excluding the impact of foreign exchange and transfers).