Reverse mortgage specialist Heartland Group has posted a record full year profit following a recovery in lending activity and lighter impairment expenses.
The New Zealand headquartered lender reported a net line profit of NZ$87 million, up 15 million or 21 per cent on its 2020 performance.
Following decisions by Australia’s major banks to withdraw most equity release products in recent years, Heartland has quickly emerged as the dominant player in reverse mortgages.
It claims to be writing almost one in every three reverse mortgages originated in Australia and now has a loan book exceeding NZ$1 billion.
Heartland said it plans to deepen its presence in Australia this year by relaxing the age eligibility criteria for its reverse mortgage product.
“Heartland’s product offerings will continue to expand, including adjustments to the age requirements for Heartland’s Reverse Mortgage to enable access to funds sooner – applications can now be accepted for couples where someone aged 60 or over has a partner aged 55-59,” the company said in a filing to the ASX and NZX.
Heartland relies on third party distribution and white label deals to generate lending activity in Australia.
Partnerships with mortgage aggregators, such as AFG, Choice and PLAN, originate a large portion of its customer base.
In New Zealand Heartland is licensed to operate as a retail bank and engages in a broader range of lending activities, including motor and asset finance, reverse and standard mortgages and rural loans.
It is an active player in the Kiwi deposits market, with its NZ$3.1 billion deposit base accounting for around 60 per cent of group funding.
Despite business uncertainty associated with Covid-19 lockdowns in New Zealand and Australia, Heartland issued upbeat earnings guidance of the 2022 financial year.
“Noting uncertainties associated with ongoing impacts of Covid-19, Heartland expects its net profit after tax for FY2022 to be in the range of NZ$93 million to NZ$96 million,” the company said in the filing.
The company will pay a final dividend of 7 cents per share on 15 September.