Its lending boom put it in a prime position when it entered FY2022
Heartland Group Holdings Limited (Heartland) has reported a net profit of $47.5 million for the interim term in the six months to December 31, compared to $44.1 million in the same period in 2020.
The financial services company was proud to announce significant growth amid rising interest rates and cost of labour on top of the pandemic disruptions it was already dealing with. Heartland was among the banks that went digital in the pandemic, reaching a stage of maturity in 2021.
“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,” Heartland reported.
Heartland’s lending rose nearly 14% to $5.4 billion over the period, with net income rising and net interest margins rising as well. This was supported by significant growth in reverse mortgage sales in New Zealand and Australia. Other main drivers were vehicle lending and digital home loans.
Jeff Greenslade, chief executive officer, also revealed that impairment expenses rose from 0.19% of average receivables in the six months to December 2020, to 0.33% in the same period in 2021. He said this was due to pandemic extensions that occurred in 2021 but was still below the six months to June 30 period when it hit 0.43%.
However, the recent changes to the Credit Contracts and Consumer Finance Act (CCCA) have slowed growth in motor and home loans over January and February. Heartland acknowledged this could hamper earnings for the rest of the financial year but is secure that this would be offset with the growth in reserve mortgages.
As of January, Heartland’s home loan online platform had accumulated over $218.5 million worth in loans across 422 customers since it launched in October 2020. The bank aims to reach a billion in lending by the end of FY2023.