Heartland Group (HGH) investor relations material

Executive summary

• Net profit after tax for H1 FY26 was NZD 48.8 million, a significant turnaround from the prior year, with underlying NPAT of NZD 46.1 million and underlying ROE up 540 basis points to 7.3%.

• Average NIM expanded 51 basis points to 3.92%, and cost to income ratio reduced by 304 basis points to 54.6%.

• Strong Reverse Mortgage growth in both New Zealand and Australia, supported by technology investment and NSA realization.

• Interim dividend declared at NZD 0.035 per share, up NZD 0.015 from H1 FY25, with a payout ratio of 72%.

• Substantial progress in divesting non-strategic assets and focusing on core lending portfolios.

Financial highlights

• Net operating income increased by NZD 15.4 million year-over-year; net interest income rose to $165.9 million from $149.1 million.

• Impairment expense ratio dropped to 0.35%, a reduction of 105 basis points year-over-year; impaired asset expense fell to $12.8 million from $50.5 million.

• Cost to income (CTI) ratio reduced to 54.6%; underlying EPS was 4.9 cps, up 4.5 cps year-over-year.

• Aggregate receivables grew AUD 157 million, 4.3% annualized; total assets grew to $8.81 billion.

• Earnings per share increased to 5.20 cents from 0.40 cents year-over-year.

Outlook and guidance

• Affirmed FY26 guidance for underlying ROE of at least 7% and underlying NPAT of at least NZD 85 million.

• NZ Banking NPAT expected to exceed $45 million, AU Banking NPAT to exceed AU$37 million (NZ$40 million).

• NIM and asset quality improvements support positive adjustments to FY26 impairment expense ratio guidance.

• Group continues to focus on simplifying its portfolio and redeploying capital into higher-return core lending.

• Regulatory capital requirements for the banking group will be reduced effective 1 March 2026.