New strategy boosts Heritage Bank financial results
HERITAGE Bank has lifted its profit in 2015/16 and will leverage the momentum achieved in the second half of the financial year as a springboard to continued growth, according to CEO Peter Lock.
Heritage released unaudited financial results for the 2015/16 year showing pre-tax profit of $51.11 million, up 6.46% on the $48.01 million achieved the previous year.
The after tax profit was $36.14 million, up 7.53% on the $33.61 million achieved in 2014/15.
Loan approvals were down slightly (3.26%), reaching $1.78 billion in 2015/16 compared to $1.84 billion in the previous year. Total consolidated assets were also marginally lower, down from $8.56 billion to $8.44 billion.
However retail deposits grew strongly, up by $294 million (6.05%) to $5.16 billion.
Mr Lock said a concerted focus on growth in the six months to June this year had given Heritage great momentum going forward.
"Of our loan approvals, we achieved $970 million in the second half of the year, compared to $810 million in the first. Similarly we grew our retail deposits by $183 million in the second half, compared to $111 million in the first," he said.
"That momentum resulted in annualised growth in our mortgage portfolio of 7.1% for the second six months of the year, which was above the Reserve Bank's reported system average of 6.7%.
"Our strategy is definitely to boost our loan volumes in coming years and grow the business as a whole, bearing in mind the need to meet our prudential regulatory requirements in terms of capital.
"Our success in achieving higher growth in the latter half of the year illustrates how well we can perform when we align our organisational efforts toward a key strategic goal. That positions us well to continue pursuing our growth agenda in future."
Chairman Mr Kerry Betros said the results reflected the key drivers of a renewed corporate strategy that is now being implemented.
"The board and senior executive group have worked closely together to review and update our corporate strategy this year," Mr Betros said.
"That's resulted in a very clear focus for us going forward.
"We will continue our program of investments in IT improvements to better position Heritage for the demands of the digital world we are now in. This will enable us to continue to grow our loan book and our overall business."
Heritage's capital adequacy ratio at 30 June 2016 was 13.95% and its liquidity ratio was 15.94%, well above regulatory requirements. Heritage's mortgage loan arrears greater than 30 days was 0.30% at 30 June 2016, well below the industry average.