Heartland Group Holdings reported a 92.7% rise in underlying net profit after tax to $90.4 million for the year ended June 30, 2026, driven by margin expansion and cost discipline. Reported NPAT increased 140.3% to $93.2 million, while underlying return on equity improved by 286 basis points to 7.1%, according to a results presentation released on Wednesday.
Net interest margins widened across both operating regions, with the group’s average underlying NIM increasing 36 basis points to 3.98%, while the exit NIM reached 4.08%. The cost-to-income ratio declined 155 basis points to 54.6%, despite a 6.7% rise in underlying operating expenses to $193.5 million. Impairment expenses fell 55 basis points to 0.45% of gross loans.
New Zealand operations contributed $47.0 million to underlying NPAT, up 91.3% from the prior year, while Australia delivered A$38.4 million, a 36.7% increase. Reverse mortgage receivables grew 16.8% in New Zealand to $1.44 billion and 19.7% in Australia to A$2.37 billion, with the latter maintaining over 40% market share. The non-performing loan ratio improved to 1.92% from 3.21% a year earlier.
Heartland also confirmed progress on its planned merger with TSB Bank, with a conditional agreement to acquire all shares for an aggregate consideration of $620 million from Toi Foundation Holdings Limited. The combined entity, to be named TSB Heartland Bank, had pro forma receivables of NZ$15.1 billion and total assets of NZ$18.3 billion as of December 31, 2025. Management expects annual cost synergies of $34 million pre-tax, fully realized within three years, though transaction costs of $9.5 million are anticipated in FY2027.
The group’s excess regulatory capital stood at approximately $110 million, rising to around $160 million under final Reserve Bank of New Zealand capital settings. A $31.7 million capital release from non-strategic assets was achieved with a 94% recovery rate, leaving a residual portfolio of $94 million. The RBNZ reduced the transitional capital overlay from 2.0% to 0.5% effective March 1, 2026.
Technology investments included $3.3 million in external costs for the New Zealand Pega platform launch in June, with a three-year budget of $11 million, and A$2.4 million for the Australia Constantinople platform in July, budgeted at A$5 million over three years. Both platforms reduced loan approval times from 10 days to 48 hours.
Heartland declared a final dividend of 3.5 cents per share, up 75% from 2.0 cents, bringing total FY2026 dividends to 7.0 cents per share at a payout ratio of 73%. The shares closed at $1.22 on August 19, 2026, yielding 8.0% based on underlying earnings per share of 9.6 cents, up from 5.0 cents in FY2025.
Forward guidance for FY2027 includes underlying NPAT of at least $102 million, an ROE target of at least 7.5%, and reverse mortgage growth exceeding 18% in both markets. The group will shift to reported-basis-only financials in FY2027, with exceptional items disclosed separately.
