Heartland Group Holdings Limited Analysis

Overview

Heartland Group Holdings Limited (NZX:HGH) is a financial services group with operations in New Zealand and Australia.

In New Zealand, Heartland Bank Limited (NZX:HBL) is a registered bank that focuses on 'best or only' banking products in three key markets: Household (which includes investment products, consumer lending, reverse mortgages and motor vehicle lending); Business; and Rural. In Australia, Heartland is a specialist provider of reverse mortgage loans and also provides funding to partners in the Small Business and Consumer Lending sectors.

Since first listing on the NZX Main Board in February 2011, Heartland has successfully progressed through several strategic phases, establishing itself as a specialist financial services group that is listed on both the NZX Main Board and ASX under a Foreign Exempt Listing.

A corporate restructure of the Heartland group was implemented in October 2018. For announcements prior to 1 November 2018 relating to Heartland shares, please refer to Heartland Bank Limited's listing (NZX:HBL).

Performance

The following information was extracted from Heartland Bank Limited's 1H2026 results, released on 26 February 2026:

Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) has announced a strong turnaround in net profit after tax (NPAT) for the six-month period ended 31 December 2025 (1H2026) of $48.8 million. On an underlying basis1, 1H2026 NPAT was $46.1 million. Heartland delivered steady progress towards its guidance for the financial year ending 30 June 2026 (FY2026), supported by net interest margin (NIM) expansion, improved asset quality metrics, strong Reverse Mortgage growth in New Zealand and Australia, cost control and accelerated non-strategic asset (NSA) realisation. Heartland continues to expect to deliver an underlying return on equity (ROE) of at least 7% and underlying NPAT of at least $85 million for FY2026.

Overview: 1H2026 performance

‒ Underlying ROE, Heartland’s key performance metric, was up 540 basis points (bps) to 7.3% (up 142 bps from the six-month period ended 30 June 2025).3 ‒ Average NIM expanded, up 51 bps to 3.92%.

‒ Underlying operating expenses (OPEX) remained steady, up $3.6 million (4.0%) primarily due to investment in Australia to support growth and technology programme costs.

‒ Underlying cost-to-income (CTI) ratio was down 304 bps to 54.6%.

‒ Consistent Reverse Mortgage growth by Heartland Bank Limited (Heartland Bank) and Heartland Bank Australia Limited (Heartland Bank Australia), with gross finance receivables (Receivables) up 15.2% and 18.9% respectively.

‒ Further momentum in Heartland Bank’s Rural6 portfolio through direct channels and intermediary partnerships, while Heartland Bank Australia saw solid growth in Australian Livestock Finance.

‒ Heartland Bank’s strategic shift to higher quality used and franchise Motor Finance lending saw a 4.8% reduction in Receivables, accompanied by significantly improved asset quality metrics.

‒ Heartland Bank’s Business Finance Receivables retracted as business conditions remained challenged – however Heartland Bank entered the second half of FY2026 (2H2026) with a compelling growth pipeline.

‒ Significant asset quality improvements reflect the benefits of Heartland Bank’s more prescriptive collections and recoveries policies, and its refined strategic focus on core product sets.

‒ NSA realisation continues to progress ahead of expectations, with a recovery rate in excess of 90%, and is tracking to be largely complete by 30 June 2026.

‒ Through NSA realisation and recent Reserve Bank of New Zealand (RBNZ) capital decisions, Heartland is well positioned for growth, holding excess capital across the group.

‒ Interim dividend of 3.5 cents per share (cps).