You are using an older browser version. Please use a supported version for the best MSN experience.

Heartland Bank lifts profit by 12 per cent

NZ NewswireNZ Newswire 16/08/2016 Paul McBeth

Heartland Bank boosted annual profit 12 per cent and will pay a bigger dividend, widening margins as low interest rates enabled cheaper funding.

Net profit rose to $54.2 million, or 11 cents per share, in the 12 months ended June 30, from $48.2m, or 10 cents, a year earlier, the Auckland-based company said in a statement. That met the bank's guidance for profit of between $51m to $55m. Interest income rose 1.9 per cent to $265.5m while lending expanded 8.8 per cent to $3.11 billion. Interest expense fell 5.7 per cent to $118.8m as it scaled back more expensive bank borrowings for cheaper retail deposits.

"The increase in NOI (net operating income) was primarily attributable to the increase in receivables and to a reduction in the cost of funds," the bank said.

Heartland has been on the hunt for new acquisitions to accelerate its expansion. It made an unsuccessful bid for Motor Trade Finance and was mooted as a potential bidder for Australia & New Zealand Banking Group's UDC Finance business.

The lender has been considering a capital return to shareholders, but says volatility in financial markets "creates greater opportunity for acquisitions."

The board declared a final dividend of 5 cents per share, payable on Oct. 7 with a Sept. 23 record date. That takes the annual payment to 8.5 cents, up from 7.5 cents a year earlier.

The shares rose 2.8 per cent to $1.47, adding to the 8.3 per cent gain so far this year. The stock is rated an average 'buy' based on three analyst recommendations compiled by Reuters, with a median price target of $1.34.

Heartland expects 2017 profit to rise to between $57m and $60m, excluding the impact of any capital management changes.

image beaconimage beaconimage beacon