Heartland wary of global market volatility in affirming annual earnings forecast
By Paul McBeth
Nov. 21 (BusinessDesk) - Heartland Bank is sticking to existing forecasts for annual profit to rise as much as 13
percent as credit growth and improving asset quality bolster the lender's books, but is watchful of increasingly
volatile global financial markets.
Chief executive Jeff Greenslade, who's led the lender since Marac Finance was carved out of Pyne Gould Corp in 2011 and
merged with the Canterbury and Southern Cross building societies, told shareholders at today's annual meeting in
Auckland that the bank is still confident net profit will be between $65 million and $68 million in the year ending June
30, 2018. It sees asset growth continuing in the first three months of the year, while cheaper wholesale funding has
offset increased competition for retail deposits.
"The macroeconomic environment for New Zealand is favourable, but internationally, markets are prone to event-driven
volatility," Greenslade said in speech notes published to the stock exchange. "It is still necessary to be cautious and
watchful in terms of exposure to global markets."
Heartland focuses on higher-margin consumer lending, such as auto-loans and reverse mortgages, and online lending
channels including peer-to-peer lender Harmoney, leaving the residential mortgage market to the likes of the
Australian-owned banks.
Auckland-based Heartland has been developing its digital strategy, which Greenslade today described as transacting
online as opposed to what the major banks offer through internet banking, which is largely an administration tool and
associated with payments. That also opens opportunities in using data to identify risks and opportunities, and Heartland
is investing in analytical tools to streamline credit decisions and improve prediction.
"Digital allows a small bank to operate with the similar scale of larger banks and to offer speed as a point of
difference," Greenslade said.
Heartland is also re-examining the make-up of its 360-strong workforce to improve the level of diversity, and has set up
a committee made up of staff from across the organisation to "recommend measurable objectives and oversee and assess
Heartland's progress towards achieving them," Greenslade said. The bank is reviewing its recruitment, retention and
communication processes, and its broader culture.
About half of the lender's staff is female, as is the senior leadership, although the wider executive team is 30 percent
female and 70 percent male. In terms of ethnic diversity, Greenslade said 47 groups were identified in a voluntary
survey across the business, but that there were gaps in "key areas" that need to be addressed.
"One of our priorities is to address the under-representation of Maori at Heartland when compared to New Zealand's
working population," he said. "We are taking a number of steps to ensure our workplace is welcoming and inclusive to
Maori and enable us to demonstrate a greater understanding and appreciation for the Maori culture."
Chair Geoff Ricketts also discussed some of Heartland's community engagement at the meeting, outlining the activities of
the Heartland Trust, which made $280,000 of charitable grants and donations to almost 20 organisations in the financial
year.
That was after Ricketts pointed to Heartland's total shareholder return of 60.9 percent in 2017, and an annual average
38.3 percent return over the past five years.
"We believe this is an excellent outcome for our shareholders," he said.
Heartland wants to raise $59 million from shareholders via a discounted rights issue which opens later this week. The
shares will be sold at $1.70 apiece, which was a 9.5 percent discount to the theoretical ex-rights price of $1.88 at the
time it was announced earlier this month. The shares fell 2 percent to $1.93.
(BusinessDesk)