New Zealand regional bank Heartland Bank has reported a 12.5 per cent rise in annual net profit after it grew vehicle and personal lending at double digit rates and lifted operating income from its reverse mortgages business by 19.2 per cent.Heartland Bank, which was created through the merger of MARAC Finance and the CBS Canterbury and Southern Cross Building societies five years ago, reported a net profit of NZ$54.2 million for the year to June 30. Total lending grew nine per cent to NZ$3.1 billion, including a 9.5 per cent rise in motor vehicle lending and growth of 8.2 per cent and 10.3 per cent in Heartland's reverse mortgage lending books in New Zealand and Australia respectively. Heartland bought Seniors Finance in Australia and New Zealand in 2014.Heartland's lending through the Harmoney peer-to-peer personal loan platform rose 55.2 per cent or NZ$19.3 million. Heartland bought a ten per cent stake in Harmoney in late 2014, and has also provided a committed loan facility to the platform of NZ$85 million. Heartland's impaired asset expense rose to NZ$13.5 million from NZ$12.1 million in the previous year, including a NZ$2.4 million increase in bad loan expenses from its rural division. Heartland bought rural stock and farm lender PGG Wrightson Finance in 2011 and rural loans makes up 18 per cent of its lending.However, Heartland said its exposure to New Zealand's debt-stressed dairy farmers represented just seven per cent of lending and its average loan to value ratio for its dairy loans was 64 per cent. Dairy farmers face a third consecutive year of low payouts and Heartland said a sharp fall in farm values was possible. "In this scenario, Heartland's profitability would likely reduce. However, Heartland would remain profitable, and we don't expect that there would be any impact on Heartland's capital," the bank said in its results presentation.Heartland's common equity tier one capital ratio rose to 15.8 per cent of risk weighted assets by June 30 from 14.5 per cent a year earlier.Heartland declared a five cents per share dividend, up 11 per cent from the previous year. It repeated its mid-May statement that it had suspended plans announced in November 2015 for a tier two capital issue followed by a capital return to shareholders of up to NZ$100 million because of volatile financial markets. It said it may still conduct the tier two issue and capital return in future, but was currently focused on acquisition opportunities.Elsewhere, Heartland said it expected continued lending growth in the current 2016/17 financial year across its rural, business, household and digital lending businesses. It forecast net profit would grow around 7.9 per cent to a range of NZ$57 million to NZ$60 million in the current year.Shares in the NZX-listed bank rose 0.7 per cent to a record-high NZ$1.44, giving the group a market capitalisation of NZ$686 million.