Heartland considers becoming a bank in Australia, where it is doing good business with its reverse mortgage policy

Heartland Group Holdings, the parent company of Heartland Bank, is eyeing up becoming a bank in Australia.  CEO Jeff Greenslade   says “it’s  a pretty exciting” opportunity.

The group this week announced a record profit of $95.1m as well as a $200m capital raising.

The  go-ahead  company said it was at the early stage of possibly acquiring start-up bank Avenue Bank in Australia.  If this goes ahead Avenue Bank will become the company’s vehicle in Australia.

But the intention also would be to make the NZ Heartland Bank a subsidiary of the Australian operation. This would require RBNZ approval and Heartland said contact with the RBNZ about this was at an early stage.

“It is currently expected that completion of any acquisition would take place no earlier than the last quarter of FY2023, and possibly not until the first half of the financial year ending 30 June 2024.. The consideration payable by Heartland on completion is expected to be A$49m, subject to adjustments,” Heartland said.

“For regulatory reasons, Heartland would be required to hold any ADI [authorised deposit taking institution] in Australia through an Australian incorporated non-operating holding company (NOHC) which is approved and regulated by APRA.”

The Heartland  Group is already active in Australia where it is  a  leader  with its reverse mortgage policy, as  it  is  in NZ.

The group, which went into a trading halt on the NZX on Tuesday, said the equity raising was to retire bridge debt and fund growth ambitions for existing business.

Heartland said the $95.1m net profit was an increase of $8.1m (9.3%) compared with the previous year. The equity raise would comprise a $130m fully underwritten placement and a $70m non-underwritten share purchase plan to shareholders in New Zealand and Australia, with the ability for Heartland to accept oversubscriptions at its discretion.

Proceeds will be used to repay a A$158m acquisition finance facility outstanding in relation to the recent acquisition of Australian livestock financing businesses StockCo Holdings 2 Pty Ltd and StockCo Australia Management Pty Limited (together, StockCo Australia), and to provide additional growth capital for Heartland’s existing businesses in Australia and New Zealand.

Heartland  is  paying a  final dividend of 5.5 cents per share (cps), taking its  FY2022 total dividend to 11.0 cps – flat on FY2021, with a payout ratio consistent with the average over the last three years.

An  interesting aspect  of  Heartland’s activity  is  its  dive  into  the  digital field.  It reported  a 120% increase in users of its mobile app for  online banking.

Heartland Bank was  awarded Canstar Savings Bank of the Year 2022 (fifth consecutive year), and has won awards for its Direct Call, 32 Day Notice Saver and 90 Day Notice Saver accounts.

New Zealand Reverse Mortgages were awarded Consumer Trusted Accreditation (fifth consecutive year), and helped its 20,000th customer.

Australian Reverse Mortgages business increased market share to 33.1%.

As  Point  of  Order sees  it  Heartland  has  shown  it  has  the  specialities  in the  banking  field   which  would  equip  it  to compete against  the   big  and  powerful  operator there.

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