HGH HY23 results, HBL considers offer of subordinated notes

NZX/ASX release
28 February 2023

HGH HY23 results, HBL considers offer of subordinated notes

Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) is pleased to announce a net profit after tax (NPAT) of $48.7 million for the six-month period ended 31 December 2022 (1H2023), an increase of $1.1 million (2.4%) compared with the six-month period ended 31 December 2021 (1H2022). On an underlying basis, 1H2023 NPAT was $54.7 million, an increase of $7.6 million (16.2%) compared with the 1H2022 underlying NPAT.

Heartland Bank Limited (Heartland Bank) is considering making an offer of up to $75 million (with the right to accept oversubscriptions of up to an additional $50 million at Heartland Bank’s discretion) of unsecured subordinated notes (Notes) to New Zealand investors and certain overseas institutional investors.

Highlights for 1H2023

Financial highlights
‒ NPAT of $48.7 million, up 2.4% ($1.1 million). Underlying NPAT of $54.7 million, up 16.2% ($7.6 million) on 1H2022 underlying NPAT.
‒ One-off items had a $6.0 million net impact on NPAT.
‒ Gross finance receivables (Receivables) of $6.5 billion, up 10.1% ($264.5 million).
‒ Underlying return on equity (ROE) of 12.1%, down 7 basis points (bps).
‒ Net interest margin (NIM) of 3.97%, down 34 bps. Underlying NIM of 4.02%, down 29 bps.
‒ Net interest income (NII) of $138.9 million, up 12.1%. Underlying NII of 140.8 million, up 13.6%.
‒ Underlying cost to income (CTI) ratio of 42.7%, down 40 bps.
‒ Impairment expense as a percentage of average Receivables decreased from 0.33% in 1H2022 to 0.29% in 1H2023, benefitting from an improved book quality.
‒ 1H2023 interim dividend of 5.5 cents per share (cps), flat on 1H2022.
‒ Earnings per share (EPS) of 7.3 cps, down 0.8 cps. Underlying EPS of 8.2 cps, up 0.2 cps from 1H2022.

Strategic highlights
‒ $198.6 million raised through 2022 equity raise to retire bridge debt and fund growth ambitions for existing businesses.
‒ Substantially completed the integration of StockCo Australia into Heartland, and repaid a A$158 million acquisition finance facility using proceeds from the equity raise.
‒ Signed a share purchase agreement for the purchase of Challenger Bank Limited (Challenger Bank) on 20 October 2022, conditional only on obtaining regulatory approvals.
‒ Australian Reverse Mortgages business increased market share to 35.9%.
‒ Heartland Bank experienced the highest growth rate in retail deposits of all main and domestic banks in New Zealand.

For the full announcement, see the attachments to this release:
‒ Heartland 1H2023 Results Announcement
‒ Heartland 1H2023 Investor Presentation
‒ Heartland NZX Results Announcement Template
‒ Heartland Distribution Notice
‒ Heartland Interim Financial Statements
‒ Heartland Bank Disclosure Statement

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The person(s) who authorised this announcement:

Jeff Greenslade
Chief Executive Officer, Heartland Group Holdings Limited

Andrew Dixson
Chief Financial Officer, Heartland Group Holdings Limited

Leanne Lazarus
Chief Executive Officer, Heartland Bank Limited

For further information and media enquiries, please contact:

Nicola Foley
Group Head of Communications, Heartland Group Holdings Limited
+64 27 345 6809
[email protected]
Level 3, Heartland House, 35 Teed Street, Newmarket, Auckland, New Zealand

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Announcement PDF