Heartland New Zealand, the bank formed from the merger of Canterbury and Southern Cross building societies and Marac Finance, says annual earnings have soared 421 percent after one-off charges in the prior year washed through and as it improved profitability.
Profit rose to $36 million in the year ended June 30, 2014, from $6.9m and near the higher end of its forecast $34m to $37m range, the Christchurch-based lender said on Thursday.
Heartland's 2013 earnings were weighed down by charges to take control of distressed assets previously managed by Pyne Gould Corp, and it said increased operating income, and continued management of expenses and impairments helped lift the 2014 profit.
The earnings represent a return on average equity (ROE) of about 9 percent, compared to a previous ROE of 2 percent, and an adjusted ROE of 6.5 percent, Heartland said in a statement.
Heartland would continue to investigate potential acquisition opportunities that were ROE accretive as well as assessing possible capital management options to improve ROE, the company said.
Earlier this year, Heartland bought a reverse mortgage business from Seniors Money International for $87m, and at its February first-half report said it was looking for new acquisitions to accelerate growth.
Last month it emerged that Motor Trade Finances, which has a loan book of some $438m, had rejected a takeover bid from the bank.
The Seniors Money acquisition contributed about $1m to net profit, it said.
In May Standard & Poor's raised the Christchurch-based lender's long-term issuer credit rating to BBB from BBB-, while retaining a negative outlook based on New Zealand's exposure to economic imbalances, it said in the upgrade.
Shares of Heartland were unchanged at 94 cents. The company will announce its annual results on August 25.
source: newshub archive