Heritage Bank has maintained excellent growth momentum in the first half of 2016/17, posting a record half-year profit and a strong lift in lending, CEO Peter Lock announced today.
Heritage’s pre-tax profit for the six months to December 2016 was $29.92 million, up 18.1% on the corresponding period the previous year. Profit after tax was $20.89 million, an increase of 17.3%.
Loan approvals in this period totalled $1.13 billion, an increase of 39.4% on the $810.50 million achieved in the same period in 2015. As a result, Heritage’s total loan portfolio grew by $299 million, to reach $7.362 billion.
Retail deposits grew by $537.76 million in this period, up 385% on the $110.89 million in the same period the previous year.
Mr Lock said Heritage’s strong performance had come despite systemic constraints on the mutual sector that the Federal Government now had the blueprint to overcome.
“Mutual institutions like Heritage give customers great value but we’re not competing on a level playing field with the big banks,” Mr Lock said
“The Senate Inquiry into Cooperatives, Mutuals and Member-Owned Firms delivered a report in March last year outlining how to improve our competitiveness. The blueprint to fix the systemic barriers is there – all the Federal Government has to do is implement those reforms and give us a fairer chance to deliver better banking services to customers.”
Mr Lock said even with these barriers, Heritage had maintained the strong growth momentum that had been generated at the end of 2015/16, and was delivering on its strategic goal to grow the business.
“Our results are very strong, and reflect our success in achieving the strategic goal of expanding our business. It’s extremely pleasing that we have had such strong growth in our lending volumes, given the competitiveness of the marketplace. That growth has come both through our branch network in Queensland and through our broker partners nationwide.
“We will continue pursuing growth around the country as we set out to more firmly entrench the Heritage brand as an important player in Australia’s home loan market.”
The improved profit result was aided by proceeds from the sale of Heritage’s financial planning business to Bridges Financial Services in December, but underlying profit remained ahead of the same period the previous year.
He said the profit result reflected both the flow-through from the growing loan portfolio and also Heritage’s success in attracting retail deposits.
“Heritage offers extremely competitive term deposit rates, as we do with home loans as well, and our ability to attract retail deposits has had a positive impact on our margins. Growing our business helps us to continue our ongoing investment in improving the customer experience, particularly in enhancing our digital capabilities.”
Loan portfolio growth helped lift total consolidated assets by 4.5% in this period to $8.82 billion. The total capital adequacy ratio decreased minimally from 13.95% at 30 June 2016 to 13.78% at 31 December. The liquidity ratio also decreased slightly from 15.94% to 15.77% in the same period.
Chairman Mr Kerry Betros said Heritage had a clear strategy that was driving the business forward.
“We are focused on growing our lending volumes and our presence nationally, on the basis of delivering a great customer experience every time. We must make the banking experience simpler and give people better access to the modern banking channels that they expect.
“We are placing a high priority on improving our digital banking capabilities, while retaining the people first culture and personal service that our customers value so highly.
“We’re also committed to living up to our vision of being passionate about helping people, by maintaining our high levels of community support. Our seven Community Branches have collectively put more than $40 million back into their local communities in their history, and we support more than 120 community events and organisations in our footprint each year. We’ve also actively raised hundreds of thousands of dollars for charities through our annual Golf Day and support for other charitable activities.
“Heritage is a great bank, that’s committed to the community, and well positioned to further drive our strategy of national growth.”
Mortgage Loan arrears greater than 30 days sat at 0.42% of the total mortgage portfolio balance, further illustrating the quality of Heritage’s loan book.