Heartland New Zealand reported an improved operating profit for the year ended June but its reported profit was hit hard after incorporating charges to take control of distressed assets previously managed by Pyne Gould Corp.
The operating profit was up 24% at $37 million on improved revenue of $107.4 million.
The reported profit of $6.9 million, down 71% on the previous corresponding period, included an increase of $16.9 million of impaired asset expense. The increase in costs came mainly in the non-core property division.
Forsyth Barr broker Suzanne Kinnaird said the result was broadly in line with her expectations.
''The underlying business continues to exhibit improving trends in net interest income, expense ratio and impairment ratio.''
Net finance receivables fell by $67.9 million to $2 billion, driven by a reduction in non-core legacy property and mortgage assets. Core net finance receivables including rural, business and motor vehicles, increased by $76.1 million.
Heartland intended paying a final dividend of 2.5 cents per share to take the total dividend to 6cps for the year.
Heartland managing director Jeff Greenslade said the bank's performance continued to improve during a period of significant strategic activity including Heartland achieving bank registration.
Heartland confirmed its earlier forecast of reported profit for the June 2014 financial year of between $34 million and $37 million.
The expectations for the next financial year reflected ongoing reductions in the cost of funds, lower impairments, continued focus on cost reductions and asset growth in core assets, in line with credit growth expectations, he said.
