New Zealand-based reverse lender, the Heartland Group could be the mystery party engaged in talks to buy Bendigo Bank’s equity release finance unit, Homesafe.
As reported in Banking Day last November, Bendigo has been talking to potential buyers of the business as the bank moves to simplify its operating structure.
Following the release of its first half results on Tuesday, Heartland confirmed that it was considering acquisition opportunities to enhance its “strategic priority” of expanding in Australia.
“Growth in Australia continues to be a strategic priority, and Heartland is exploring potential acquisitions as part of this,” the company’s directors told shareholders in its interim financial report.
Heartland did not specifically identify Homesafe as an acquisition target.
Some investors are keen to see Bendigo offload the Homesafe arm because it would trigger a significant regulatory capital release for the bank.
In the last decade Heartland has emerged as the dominant player in Australia’s reverse mortgage market.
The company claims that its share of the Australian reverse mortgage sector increased to 31 per cent from 28 per cent in the 12 months to the end of December.
Heartland’s deepening presence in Australia was one of the key drivers of an 8 per cent lift in first half profit to NZ$47.5 million ($A 44.27 million).
The company’s Australian reverse mortgage book grew 12 per cent to NZ$1.14 billion, with directors noting that the growth rate was “higher than expected”.
Heartland is selling equity release mortgages through a direct online channel, but continues to rely on broker groups to originate most of its business in Australia.
The company’s products are being marketed through AFG, Choice, PLAN Australia and the FAST network.
Heartland, which has a banking licence in NZ, is preparing for an extended bout of growth in Australia after securing expanded warehouse funding that includes the addition of a new source of mezzanine finance.
The board is expecting second half profit to be in line with the interim result after issuing guidance that full year earnings would be in the range of NZ$93 million to NZ$96 million.