Profit jumps for new bank

Heartland Bank notched up a profit of $8.7 million for the three months to the end of September, 63 per cent ahead of the same period a year before.

The new bank's first-quarter result was revealed in its disclosure statement for the first quarter of its financial year.

The Reserve Bank granted Heartland registered bank status almost a year ago and the new bank is required to follow disclosure obligations for registered banks.

Heartland's main source of income is interest earned from loans. That amounted to $50.55m in the first quarter, slightly down from $51.1m the year before.

Its interest expense was $24.58m, leaving it with net interest income of almost $26m in the quarter. Half of that was earned from loans to consumers, many of them for vehicles.

The other half was earned from loans to businesses, 56 per cent, and loans to rural businesses, 44 per cent.

Chief financial officer Simon Owen said the higher profit was due to the lower cost of funding after being a bank for almost a year, and products that earned higher interest such as vehicle loans.

In the September quarter a year ago Heartland had been holding more cash because of the end of the Crown guarantee. Holding cash meant less earnings with that money.

Heartland Bank is the operating company of Heartland New Zealand, the holding company which is listed on the NZX.

Heartland NZ has forecast a profit after tax of $34m to $37m for the June 30, 2014, year.

Fairfax Media