Heartland edges toward meeting annual profit forecast
Heartland New Zealand has edged closer to meeting its annual profit forecast after posting a $5.3 million operating net profit for the three months ended March.
Wednesday, April 11th 2012, 10:57AM
by Jenny Ruth
The latest quarter's results compares with the $3.6 million operating profit it reported for the previous two quarters.
Heartland's chief financial officer Sean Kam has also announced his resignation and will leave the company on June 21.
Including a previously announced $6.2 million tax benefit, net profit for the nine months ended March was $15.1 million.
Heartland has forecast full-year net profit will be between $20 million and $22 million.
The aspiring bank says the improved third quarter result reflects improved profit margins mainly due to the expiry of the government's guarantee of its deposits on December 31, a change in its lending product mix and decreases in costs.
Its normalised cost-to-income ratio fell to 62% for the quarter from 79% in the first six months of the year, Heartland says.
Its impairment expense is stable, as is the asset quality of its core lending book which grew by a net $18 million to $2.09 billion during the quarter, largely reflecting growth in its business division.
The rural division pipeline continues to improve and it expects increased loan drawdowns in coming months. While new consumer lending is ahead of the same quarter last year, despite a competitive environment, its retail mortgage business remains subdued, the company says.
Kam says his skills were best suited to "transformational" roles and the transition which created Heartland is now complete.
Heartland was formed early last year from the merger of Marac Finance, CBS Canterbury and Southern Cross Building Society and it bought PGG Wrightson Finance at the end of August last year.
Chief executive Jeff Greenslade says Heartland has appointed a recruitment agency to help find a replacement for Kam although internal candidates are also being considered.
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