Heartland Group Holdings Ltd. · NZX:HGH
Heartland — Heartland Bank — H1 FY2017 Earnings Presentation
27 slides from Heartland's earnings presentation, Feb 21, 2017
Slide 1: Half Year Results to 31 December 2016
Half Year Results to 31 December 2016 Annual Meeting 1 November 2013 | Page 1 21 February 2017
Slide 2: Important Notice
Important Notice • This presentation has been prepared by Heartland Bank Limited (NZX : HBL) (the Company) for the purpose of briefings in relation to its financial statements. • The presentation and the briefing (together the Presentation) contain summary information only, and you should not rely o
Slide 3: Agenda
Agenda • Introduction • Financial overview • Dividend • Strategy and core business updates • Looking forward • Questions | Page 3
Slide 4: Introduction
Introduction Annual Meeting 1 November 2013 | Page 4
Slide 5: Half Year Highlights
Half Year Highlights • Increase in profitability of 14% • Strong receivables growth of $221m (7%) • Return on equity of 11.6% • Institutional share placement completed to support asset growth • Launch of multiple digital loan origination platforms | Page 5
Slide 6: Financial Overview
Financial Overview Photo credit: Chris Williams Annual Meeting 1 November 2013 | Page 6
Slide 7: Financial Half Year Overview
Financial Half Year Overview Financial Year Overview 14% Growth in Profitability 6 months to 6 months to 12 months to Dec 2016 Dec 2015 Jun 2016 • NPAT of $29.1m Net interest income (NZ$m) 79.0 (NZ$m) 71.5 (NZ$m) 146.7 Net other income 4.0 6.3 10.9 • Increase in NPAT of $3.5m or 14% Net operating in
Slide 8: Net Operating Income
Net Operating Income NOI driving profitability growth • Growth in NOI due to: – Growth from all core divisions – Continued reduction CoF • Cost to income trending down and expected to continue • Increase in current half due to seasonal and timing of expenditure (marketing, incentive and leave accrua
Slide 9: Net Interest Margin (NIM)
Net Interest Margin (NIM) NIM impacted by: • Customer behaviour – higher motor vehicle early settlements • Product mix eg. less higher earning livestock loans in Rural • Lower NIM reverse mortgage business (however lower capital usage and improves ROE) Looking forward: • Livestock trading conditions
Slide 10: Cost of Funds
Cost of Funds Solid funding position • More competitive funding environment • Continue to grow deposits (+$230m) to fund asset growth • COF still decreasing | Page 10
Slide 11: Asset Quality Trends
Asset Quality Trends Sound asset quality • Continued improvement in asset quality • Impairment expense up $1.3m to $6.9m for the half year • Household impairments up $2.2m due to growth (motor impairments remain acceptable at 72bp) • Business division impairments down $0.9m due to loan recoveries 30
Slide 12: Balance Sheet Summary
Balance Sheet Summary Strong growth in receivables • Total assets increased by $273.0m • Net finance receivables increased by $220.8m or 7% Balance Sheet Summary 31 Dec 2015 30 Jun 2016 31 Dec 2016 (NZ$m) (NZ$m) (NZ$m) Total assets 3,344.5 3,547.2 3,820.1 Total liabilities 2,858.8 3,048.8 3,292.1 To
Slide 13: Net Finance Receivables Bridge
Net Finance Receivables Bridge Portfolio mix movements | Page 13
Slide 14: Capital
Capital Sound capital position • Regulatory capital ratio of 13.0% • Capital has been raised to support asset growth and to invest in digital strategy • Institutional placement of $20m completed in December 2016 • Have increased size of SPP to $20m, to allow for greater retail shareholder participat
Slide 15: Dividend
Dividend Photo credit: Chris Williams Annual Meeting 1 November 2013 | Page 15
Slide 16: Dividend
Dividend Fully imputed interim dividend of 3.5 cents per share Three year relative performance to NZ50G: • 77% share price appreciation • 127% total shareholder return 1 (TSR) Note, “ICs” represents Imputation Credits ascribed to dividend payments 1 Rebased share price assumes dividends are reinvest
Slide 17: Strategy and Core Business Updates
Strategy and Core Business Updates Photo credit: Chris Williams Annual Meeting 1 November 2013 | Page 17
Slide 18: Next Phase of Heartland's Strategy
Next Phase of Heartland’s Strategy PRODUCTS DISTRIBUTION Delivery of innovative CHANNELS EXPAND banking products in Delivery of products REACH AT niches that are underserviced by the through distribution LOWER COST other banks channels that provide the best customer experience • Now in the second ph
Slide 19: Strategic Priorities
Strategic Priorities Priority Progress to Date 2H17 Continue development of digital Launched multiple digital loan Development of lead origination platforms origination platforms including generation portal for deposits Open for Business, Open for Utilise data to identify Livestock and Open fo
Slide 20: Digital Partnerships
Digital Partnerships • New partnership with Spotcap Australia, an online lender offering unsecured business loans of up to A$250,000 to SMEs • Utilises a unique proprietary algorithm providing alternative basis for analysis • Heartland providing A$20m lending facility to Spotcap giving Heartland opp
Slide 21: Core Business Updates: Household – Consumer
Core Business Updates Household – Consumer: Net Receivables NZ$879m • Personal lending and motor vehicle loans – 26% of net receivables • Growth of $57m or 7%, expected to continue • Fast, simple, transparent loans originated via digital platforms • i-finance now $23m net receivables NZ$780m (up 26%
Slide 22: Core Business Updates: Household – Seniors Finance
Core Business Updates Household – Seniors Finance: Net Receivables NZ $380m / AU $472m • 26% of net receivables • $17m or 5% growth in NZ and $40m or 9% in Australia • Continue to increase awareness and build brand recognition • Strong growth in Australia driven by continued broadening of broker dis
Slide 23: Core Business Updates: Business
Core Business Updates Business: Net Receivables NZ$947m • 28% of net receivables • Growth of $49m or 5% • Open for Business – “quick application-quick decision” business loans grew to $27m • Extending reach through NZ$833m intermediary network • Reduce average loan size to avoid concentrations | Pag
Slide 24: Core Business Updates: Rural
Core Business Updates Rural: Net Receivables NZ$619m • 19% of net receivables • Growth of $66m or 12%, primarily through term loans across all key rural sectors • Launch of digital loan origination NZ$506m platform Open for Livestock • Increase in livestock facilities expected in 2H17 • Trading cond
Slide 25: Looking forward
Looking forward Annual Meeting 1 November 2013 | Page 25
Slide 26: Looking forward
Looking forward • Expect underlying asset growth to continue across all divisions • Digital loan origination platforms provide significant low cost growth opportunities (lower cost of customer acquisition) • New phase of capital management: • Have reached a normalised state and will tap the market t
Slide 27: Questions
Questions Annual Meeting 1 November 2013 | Page 27