Heartland Group Holdings reported a 140% jump in reported net profit after tax to NZD 93.2 million for the year ended June 30, 2026, as underlying profit nearly doubled to NZD 90.4 million. The bank’s stock rose 1.23% to NZD 1.235, near its 52-week high of NZD 1.30.
Underlying return on equity increased 286 basis points to 7.1%, while reported ROE reached 7.3%, up 411 basis points from the prior year. Net interest margins expanded 36 basis points to 3.98%, and the cost-to-income ratio declined 155 basis points to 54.6%. Impairment expenses fell 55 basis points to 0.45%, while operating expenses rose NZD 12.2 million, or 6.7%, to NZD 193.5 million.
The bank released NZD 31.7 million in capital through its non-strategic assets program, achieving a 94% recovery rate and reducing total non-strategic assets by NZD 374.2 million. Residual non-strategic assets stood at NZD 94 million as of June 30, 2026. Excess regulatory capital totaled approximately NZD 110 million above expected requirements, rising to NZD 160 million when including ordinary internal buffers under pending RBNZ risk weight changes.
Reverse mortgage portfolios expanded sharply, with New Zealand balances up 16.8% to NZD 1.65 billion and Australian balances rising 19.7% to A$2.37 billion. Annualized growth accelerated from 14.0% in the first quarter to 18.5% in the fourth quarter. The New Zealand reverse mortgage NPL ratio stood at 0.06%, with an average loan size of NZD 163,000 and a weighted average loan-to-value ratio of 27.5%. Turnaround time for applications improved from 10 days to 48 hours.
Heartland also announced a final dividend of 3.5 cents per share, bringing the full-year payout to 7.0 cents, a 75% increase from FY2025. The payout ratio reached 73%, exceeding the 50% target. The bank guided FY2027 ROE to at least 7.5% and underlying NPAT to at least NZD 102 million, excluding NZD 9.5 million in TSB merger-related transaction costs.
The conditional merger agreement to acquire TSB Bank Limited for NZD 620 million remains on track, with shareholder approval scheduled for September 30, 2026, and completion targeted for December 2026. The combined entity, to be named TSB Heartland Bank, would hold NZD 12.3 billion in New Zealand receivables and A$2.5 billion in Australian receivables as of December 31, 2025. Expected annual cost synergies total NZD 34 million before tax once fully realized within three years.
CEO Andrew Dixson said the improved ROE, margin expansion and asset quality provided a strong foundation for the next phase of growth.
