Full Year 2026 Heartland Group Holdings Ltd Earnings Call Transcript
Key Points
- Underlying net profit after tax surged to $90.4 million, up from $46.9 million in FY 2025, with underlying return on equity improving by 286 basis points to 7.3%.
- Average net interest margin expanded by 36 basis points to 3.98%, driven by lower cost of funds in both New Zealand and Australia.
- Asset quality improved significantly, with non-performing loans reduced and the impairment expense ratio down 55 basis points to 0.45%.
- The non-strategic asset (NSA) realization program concluded successfully, reducing receivables by $254 million and releasing $32 million of capital with a 94% recovery rate.
- Reverse mortgage portfolios delivered strong growth, with receivables up 16.8% in New Zealand and 19.7% in Australia, and the Australian business maintained over 40% market share.
- The proposed merger with TSB is expected to create a larger, more diversified New Zealand challenger bank with enhanced scale and funding diversification.
- Capital position strengthened, with the RBNZ reducing the transitional capital overlay from 2% to 0.5% and the group entering FY 2027 with considerable excess capital.
- Operating expenses increased by $12.2 million, driven by technology investments, staff costs, and growth-related expenses, though cost-to-income ratio improved.
- Gross yields declined by 91 basis points in New Zealand due to intensified pricing competition and soft credit demand, partially offset by lower funding costs.
- Business finance receivables in New Zealand reduced by 18.1% to $639 million, reflecting continued focus on asset quality and subdued market conditions in construction and transport.
- The Australian livestock portfolio saw a marginal retraction in receivables, down 1.7% to $250 million, due to higher trading velocity.
- The accounting change for reverse mortgage commissions in Australia resulted in a $6.6 million one-off adjustment, reducing NIM by 7 basis points.
- FY 2027 NIM is expected to contract by about 13 basis points in Australia due to competitive pressure and higher term deposit rollover rates.
- The proposed TSB merger remains conditional, with uncertainties including trustee approval, shareholder approval, and regulatory approvals, and transaction costs have been incurred.
Full year results.
All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Andrew Dixon, CEO, Heartland Group. Please go ahead.
Thank you and good morning. Welcome to the Heartland Group 2026 full year results or.
I am Andrew Dixon, Chief Executive of the Heartland Group and I'm joined today by Leanne Lazarus, Executive of Heartland Bank in New Zealand Michelle Windsor, Chief Executive of Heartland Bank in Australia and Kerry Conway, Chief Financial Officer of Heartland Banking Group.
Starting with slide 5, the FY 2026 summary.
We set ourselves a number of clear objectives for FY 2026, namely to rebuild the profitability and return profile of the group, but in particular to restore margins, improve asset quality and complete the
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