Heartland Group Holdings Ltd. · NZX:HGH
Heartland — H1 FY2016 Earnings Presentation
24 slides from Heartland's earnings presentation, February 2016
Slide 1: Half Year Results to 31 December 2015
Half Year Results to 31 December 2015 Jeff Greenslade | Simon Owen | Chris Flood Annual Meeting 1 November 2013 | Page 1
Slide 2: Important Notice
Important Notice This presentation has been prepared by Heartland Bank Limited (NZX: HBL) for the purpose of briefings in relation to its financial statements. The presentation and the briefing constitute summary information only, and you should not rely on them in isolation from the full detail set
Slide 3: Agenda
Agenda • Introduction • Financial overview • Strategy and business updates • Dividend • Questions Half Year Results to 31 December 2015 | Page 3
Slide 4: Introduction
Introduction Annual Meeting 1 November 2013 | Page 4
Slide 5: Half Year Highlights
Half Year Highlights • Continued profitability growth (up 9% half on half NPAT) • Solid asset growth in core business divisions • Return on equity of 10.6% • Successful amalgamation of Heartland Bank and Heartland New Zealand on 31 December 2015, simplifying the group structure • Growth in direct pe
Slide 6: Financial Overview
Financial Overview Annual Meeting 1 November 2013 | Page 6
Slide 7: Half Year Overview
Half Year Overview 9% Growth in Profitability • Achieved NPAT of $25.6m Financial Year Overview • Increase in NPAT of $2.1m or 9% 6 months to 6 months to 12 months to Dec 2015 Dec 2014 Jun 2015 • NOI increase of $7.5m or 11%* Net interest income (NZ$m) 71.5 (NZ$m) 65.7 (NZ$m) 134.4 Net other income
Slide 8: Net Profit Before Tax
Net Profit Before Tax Continued Profitability Growth Trend • Continued profit growth half on half • Interest margin historic contributor to growth • Acquisition contributed in second half 2014 • Organic asset growth driver of increased profit in last two periods • $2.5m increase from 2H15, despite p
Slide 9: Net Profit Before Tax - Bridge
Net Profit Before Tax - Bridge Breakdown of component parts Annual Meeting 1 November 2013 | Page 9 Half Year Results to 31 December 2015 | Page 9
Slide 10: Operational Efficiency
Operational Efficiency Cost to Income remaining below 50% • Ratio trending lower as NOI continues to grow • Cost to income ratio increased in last half due to $1m non recurring costs incurred in Q1 2016, and a $1.2m marketing spend on new online origination initiatives • Expected to trend lower as a
Slide 11: Net Operating Income
Net Operating Income NOI driving profitability growth • NOI up $7.5m on prior half or $3.2m on preceding half* • Growth in NOI due to: – Growth in core assets – Product mix changes * Net operating income for 6 months to Dec 2014 and 12 months to Jun 2015 includes share of MARAC Insurance profit Annu
Slide 12: Balance Sheet Summary
Balance Sheet Summary Growth in receivables • Total assets decreased by $15m • Net finance receivables increased by $67m or 2% • Core asset classes up $87m, retail down $20m as we exit as planned • Seniors Finance book up $6m. NZ up $9m and Australia up A$18m Annual Meeting 1 November 2013 | Page 12
Slide 13: Net Finance Receivables Bridge
Net Finance Receivables Bridge Core Asset Growth Annual Meeting 1 November 2013 | Page 13 Half Year Results to 31 December 2015 | Page 13
Slide 14: Asset Quality Trends
Asset Quality Trends Sound asset quality • Improvement in asset quality • Non-Core Property reduced by sale of investment properties • Impairments up $0.5m to $5.6m half on half • Households up $0.4m – due to the growth in personal loan and motor vehicle books and arrears moving to normalised levels
Slide 15: Cost of Funds
Cost of Funds Solid funding position Decrease in COF on back of OCR decreases, and reduced margin on term deposits Annual Meeting 1 November 2013 | Page 15 Half Year Results to 31 December 2015 | Page 15
Slide 16: Business Updates and Strategy
Business Updates and Strategy Photo credit: Chris Williams Annual Meeting 1 November 2013 | Page 16
Slide 17: Heartland's Strategy
Heartland’s Strategy Seek opportunities where we can provide innovative products in niche areas within the household, business and rural sectors that are under-serviced by the major banks Grow quality, sustainable earnings and improve return on equity Achieved through: • Harnessing disruptive new te
Slide 18: Core Business Updates: Household – Consumer
Core Business Updates Household – Consumer: NZ$776m • Personal lending and motor vehicle loans - 27% of net receivables • Strong growth of $40m or 5%, expected to continue in 2H16 • Fast, simple, transparent loans originated online NZ$780m • i-finance and Harmoney • Harmoney facility renewed with si
Slide 19: Core Business Updates: Household – Seniors Finance
Core Business Updates Household – Seniors Finance: NZ$344m/AU$392m • 26% of net receivables - 12% in NZ and 14% in Australia • Combined growth of $6m or 1%. • $9m or 3% in NZ and A$18m or 5% in Australia • Steady increase in new business, high repayment levels • NZ – increase awareness and build bra
Slide 20: Core Business Updates: Business
Core Business Updates Business: NZ$825m • 28% of net receivables. • Growth of $24 million or 3%. • Reposition lending towards smaller loans to SMEs • Open For Business – “quick application- quick decision” business loans • Early stages of development, NZ$833m applications expected to increase in 2H1
Slide 21: Core Business Updates: Rural
Core Business Updates Rural: NZ$505m • 17% of net receivables. • Growth of $17m or 3%. • Livestock financing, financing younger farmers, farm transition loans NZ$506m • Alliance partner channel • Monitoring the dairy sector with close attention • Continued low dairy prices dictate a cautious approac
Slide 22: Looking forward
Looking forward • Expect underlying asset growth to continue across all divisions • Higher growth in Consumer and HER loans • Greater acquisition opportunities in current market conditions and wish to assess opportunities (if any) • Continue to monitor capital position (including Tier 2 regulatory c
Slide 23: Dividend
Dividend Fully imputed interim dividend of 3.5 cents per share Three year relative performance to NZ50G: • 91% share price appreciation 250 HBL NZ50G 225 • 137% total shareholder return 200 Index Value (TSR) 175 150 125 100 75 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Annual Meeting 1 Novembe
Slide 24: Questions
Questions Photo credit: Chris Williams Annual Meeting 1 November 2013 | Page 24
Heartland Group Holdings — H1 FY2016 Earnings Presentation on 6ix