Heartland Group (HGH) H1 2025 earnings summary

Executive summary

• Net profit after tax for H1 FY25 was $3.6 million, down from $37.6 million in the prior year, mainly due to higher impairment and operating expenses, despite strong growth in Australian operations and reverse mortgages.

• Underlying NPAT for H1 FY25 was $10.7 million, with FY25 underlying NPAT expected to be at least $45 million.

• Reverse mortgage portfolios in both NZ and Australia grew over 15% year-over-year, with Australia achieving record new business.

• Australian Bank's transition to deposit funding (now 60–61%) is supporting NIM expansion and growth, targeting 80% by year-end.

• Group remains well capitalized with strong liquidity and no changes to credit ratings.

Financial highlights

• Net operating income increased by $12 million year-over-year to $155.1 million.

• Operating expenses rose to $98.1 million, up $31.6 million, including regulatory and one-off costs.

• Impairment expense more than doubled to $50.5 million, mainly from NZ bank de-risking and repositioning non-performing loans.

• Interim dividend declared at 2 cents per share.

• Earnings per share dropped to 0.40 cents from 5.30 cents year-over-year.

Outlook and guidance

• Underlying NPAT for FY25 expected to be at least $45 million, with margin expansion forecast in both NZ and Australia.

• Net interest margin projected to exit FY25 above 4% in NZ and above 3.6% in Australia.

• Cost-to-income ratio targeted to return to the 40s in both Australia (by year-end) and New Zealand (FY26).

• Continued strong growth expected in reverse mortgages; moderated growth in other lending portfolios.