Heartland Group (HGH) H2 2026 earnings summary

Executive summary

• Underlying NPAT rose to NZD 90.4 million from NZD 46.9 million year-over-year, with reported NPAT at NZD 93.2 million; all FY26 objectives were met, including restored margins, improved asset quality, and completion of the NSA program.

• NSA realization program concluded with a 94% recovery rate, releasing NZD 32 million (USD 31.7 million) of capital and reducing receivables exposure by NZD 254 million.

• Announced proposed merger with TSB to create a NZD 15 billion challenger bank, with a conditional agreement to acquire TSB for NZD 620 million.

• Declared FY26 final dividend of NZD 0.035 per share, payout ratio of 73%.

• Reverse Mortgages and Rural portfolios delivered strong receivables growth of 16.8% and 10.8%, respectively.

Financial highlights

• Net operating income increased to NZD 354.3 million, up NZD 31.5 million year-over-year; group underlying NPAT rose 71.9% to NZD 90.4 million.

• Cost to income ratio improved by 155 basis points to 54.6%; OPEX was NZD 196.0 million (underlying NZD 193.5 million).

• Impairment expense ratio reduced by 55 basis points to 0.45%.

• Receivables grew 9.1% to NZD 7,804 million; equity increased 9.7% to NZD 1,337 million.

• Underlying EPS rose to 9.6 cps from 5.0 cps.

Outlook and guidance

• FY27 NPAT expected to be at least NZD 102 million, excluding merger costs of approximately NZD 9.5 million.

• Targeting return on equity of at least 7.5% and reverse mortgage growth above 18% in both countries.

• Dividend payout ratio to remain at least 50% of NPAT.

• FY27 OPEX expected to be less than NZD 212 million, CTI ratio below 55.7%, impairment expense ratio below 0.32%.

• Guidance to be updated upon completion of TSB merger.