Heartland Group Holdings Ltd. · NZX:HGH
Heartland — Heartland New Zealand — H1 FY2013 Earnings Presentation
20 slides from Heartland's earnings presentation, February 2013
Slide 1: Half Year Results to 31 December 2012
Half Year Results to 31 December 2012 Jeff Greenslade Interim Results Simon to 31 December 2012 | Page 1 Owen Craig Stephen
Slide 2: Important Notice
Important Notice This presentation has been prepared by Heartland New Zealand Limited (Heartland) (NZX: HNZ) for the purpose of briefings provided by HNZ in relation to its financial statements. The presentation and the briefing constitute summary information only, and you should not rely on them in
Slide 3: Agenda
Agenda • Introduction Jeff Greenslade • Financial overview Simon Owen / Craig Stephen • Looking forward Jeff Greenslade • Questions Interim Results to 31 December 2012 | Page 3
Slide 4: Introduction
Introduction Achievements 1. Bank registration 2. Dividend policy set, special dividend paid 3. Interim dividend announced 4. Investment grade credit rating affirmed and outlook to stable Key Priorities 1. Focus shift to drive financial performance 2. Cost of funds reduction underway 3. Balance shee
Slide 5: Financial Overview
Financial Overview Simon Owen / Craig Stephen Interim Results to 31 December 2012 | Page 5
Slide 6: Financial Half Year Overview
Financial Half Year Overview Big increase in NPBT • Achieved NPAT of $10.7m 6 months to 6 months to 12 months to Dec 2012 Dec 2011 Jun 2012 • Prior half included one-off Net interest income (NZ$m) 46.8 (NZ$m) 39.1 (NZ$m) 83.6 tax credits of $6.2m Net other income 5.3 6.0 11.8 Net operating income *
Slide 7: Net Profit Before Tax
Net Profit Before Tax Trend improvement in NPBT continues • NPBT improving half on half Net Profit Before Tax • Profitability growth rate slowed in the half 16.0 14.7 14.9 year ended 31 Dec 2012 (1H13) 14.0 • Higher growth in half year ended 30 June 12.0 10.0 2012 (2H12) due to less liquidity held a
Slide 8: Net Profit Before Tax - Bridge
Net Profit Before Tax - Bridge Breakdown of component parts NPBT NPBT 1H13 v 1H12 ($m) 1H13 v 2H12 ($m) 18.0 20.0 3.7 16.0 18.0 0.1 14.9 1.9 14.0 16.0 0.5 0.1 6.9 1.5 14.7 14.9 14.0 2.1 12.0 12.0 10.0 10.0 8.0 8.0 6.0 5.6 6.0 4.0 4.0 2.0 2.0 0.0 0.0 NPBT Net Operating Operating Impaired asset Equity
Slide 9: Operational Efficiency
Operational Efficiency We are on track Net Operating Income and Operating Expenses 55.0 50.0 • On track – cost to income trend line 45.0 shows steady improvement $m 40.0 • Some wobbles due to integration, bank 35.0 30.0 registration and expense timing 25.0 • Cost project to further reduce nominal 2H
Slide 10: Balance Sheet Summary
Balance Sheet Summary Strong balance sheet Net Operating Income 60 • Total assets stable $52m • Net finance receivables fell by $33m 50 $50m $45m • NTA increased to $0.90 per share Net Finance Receivables 2,500 40 24 23 • Core divisions net receivables up $2,045m $2,078m 22 Retail & Consumer Busines
Slide 11: Net Finance Receivables - Bridge
Net Finance Receivables - Bridge Core up, Non-Core down Receivables Movement 6 Months ended 31 December 2012 2,090 2,078 2,080 39 2,070 2 2,060 10 2,050 2,045 $m 2,040 17 2,030 48 2,020 2,010 2,000 Receivables Retail Consumer Business Rural Non Core Property Receivables 30/6/2012 31/12/2012 Interim
Slide 12: Asset Quality Trends
Asset Quality Trends Trend improvement in underlying asset quality • Asset quality improving Heartland Asset Quality $m • Non-core property remains 200 driver of elevated impairment 180 160 139 levels 140 Impaired Assets ($m) 122 118 120 108 • Underlying impairment trend 65 100 67 80 52 49 improveme
Slide 13: Funding & Liquidity
Funding & Liquidity 100% Liquidity Split 35% 90% 27% 25% 31% 30% 80% 56% Strong liquidity position 50% % of Total Liabilities 70% 25% Liquidity Split (%) 60% 20% 50% 42% 41% • Improving liquidity mix 40% 14% 15% 59% 30% 10% 44% • Strong positive cash flows from asset 20% 36% 30% 33% 5% 10% 10% base
Slide 14: Cost of Funds
Cost of Funds Cost of funds continue to track lower Heartland Bank - Cost of Funds • Cost of Funds has fallen in the 12 months to 31 Dec 2012 due to: - Funding margin alignment with bank peers - Run-off of higher cost deposits Apr-12 Sep-11 Feb-12 Sep-12 Jun-11 Jul-11 Jun-12 Jul-12 Dec-11 Mar-12 Dec
Slide 15: Progress since Bank Registration
Progress since Bank Registration Solid deposit growth & lower COF Average Weekly New Funds & Reinvestment Rates Liquidity Bank Registration 90% 12 17 December Bank Registration 2012 17 December 700 35% 2012 85% 10 650 30% New Fund Flows ($m) 80% 8 600 Reinvestment Rate 25% As % of Total Liabilities
Slide 16: Looking Forward
Looking Forward Jeff Greenslade Interim Results to 31 December 2012 | Page 16
Slide 17: Supporting NZ Households, Farmers and Small Businesses
Supporting NZ Households, Farmers and Small Businesses Products & Campaigns Business Call Account Invoice Finance Livestock Finance School Fees Interim Results to 31 December 2012 | Page 17
Slide 18: Operational Performance
Operational Performance How do we deliver >10% ROE 1. To increase profitability: - Grow core assets - Reduce Cost of Funds - Reduce cost to income ratio. Target to reduce nominal costs in 2014 year - Manage property impairments 2. Right size capital base - Heartland Bank had $67m capital buffer over
Slide 19: Other Matters
Other Matters 1. Non-core property review 2. Board review 3. Dividend Interim Results to 31 December 2012 | Page 19
Slide 20: Questions
Questions Interim Results to 31 December 2012 | Page 20
Heartland New Zealand — H1 FY2013 Earnings Presentation on 6ix