Full Year 2025 Heartland Group Holdings Ltd Earnings Call Transcript
Key Points
- Heartland Group Holdings Ltd (ASX:HGH) achieved strong growth in reverse mortgages, with receivables up 15.5% in New Zealand and 18.5% in Australia, indicating a growing market demand.
- The company successfully integrated its existing Australian businesses into the acquired ADI, forming a new and unique Australian bank with deposits forming 81% of the bank's funding.
- Heartland Group Holdings Ltd (ASX:HGH) restored a superior margin with both banks delivering strong exit margins driven by a lower cost of funds.
- The company made positive changes to collections and recoveries, improving overall asset quality and exceeding recovery expectations.
- Heartland Group Holdings Ltd (ASX:HGH) declared a final dividend of $0.02 per share, representing a payout ratio of 52% for the second half of FY25, aligned with their target of at least 50% of underlying profit after tax.
- Impairment expense increased by $25 million due to economic deterioration and de-risking of lending portfolios, impacting financial performance.
- Operating expenses rose by $53 million, primarily due to non-repeating benefits in FY24 and costs related to regulatory requirements and software.
- Growth in motor finance and asset finance remained challenged due to subdued economic conditions and a focus on high-quality lending.
- The New Zealand bank's net profit after tax decreased by 60% compared to the prior year, significantly impacted by impairments in the first half.
- Business finance faced challenges with deteriorating operating conditions, leading to a rise in arrears and increased company liquidations.
Question and answer session. If you would like to ask a question, you press the star key followed by the number one on your telephone keypad.
I'd now like to hand the conference over to Mr. Andrew Dixon, CEO of Heartland Group. Please go ahead.
Good morning everyone and welcome to the Heartland Group FY 20,254 year results.
I'm Andrew Dixon, Chief Executive of Heartland Group, and I'm joined today by Leanne Lazarus, Chief Executive of Heartland Bank in New Zealand, Michelle Windsor, Chief Executive of Heartland Bank in Australia, and Kerry Conway, Chief Financial Officer of the Heartland Banking Group.
Starting with slide 5, the FY 2025 summary.
FI 2025 has been a year of significant reset, change, and integration, during which we have prioritized capital efficiency, restoring a superior margin, and the act of derisking of our lending portfolios.
While this has impacted underlying financial performance, particularly in the first half, it has
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