Lower costs boost Heartland profit

21:35, Feb 24 2013

Heartland New Zealand, has posted an increased half-year net profit after tax of $10.7 million and declared a debut interim dividend of 2 cents a share.

The result is better than the 9 per cent improvement appears because the previous first half result of $9.8m was boosted by a one off tax benefit of $6.2m.

Net profit before tax was $14.9m for the six months to December 31,  up $9.3m from the $5.6m net profit after tax of the previous half.

Earnings a share were 3c based on weighted average shares.

The company said the interim 2c a share dividend would be paid on April 5 and be fully imputed. It follows a special dividend of 1.5c late last year.

Operating costs fell by $3.7m to $31.9m with the operating cost ratio falling to 62 per cent from 79 per cent.

Impaired assets rose to $5.3m, from $3.8m. Most of the impairment, $4m, was from the non-core property book.

The amount of loans in the business and consumer books fell slightly while the rural loans book grew marginally.

The company announced it was reviewing the composition of the parent company, Heartland New Zealand, and the board of the bank subsidiary, Heartland Bank.

It aimed for representation of broader shareholder interests on the parent company board, more diversity and the depth of bank experience and at least half the bank board to be fully independent from the parent company.

Heartland NZ, the parent, had decided to invite significant shareholder and South Island businessman Greg Tomlinson to join the board.

Tomlinson is from Marlborough, and has private investments in the wine, healthcare, pharmaceutical and finance industries, including a substantial investment in Heartland.

Heartland said its aim was to generate ''acceptable and sustainable'' earnings from the 2014 financial year onwards and strategies were being formulated for that.

It required asset growth, reduction in the costs of funds, reduced operating costs and fewer non-core property impairments.