Strong results have Heritage Bank well positioned to handle COVID impacts

23 September 2020

Heritage Bank’s strong underlying performance in the 2019/20 financial year has it well positioned for future growth, despite the impacts of COVID, CEO Peter Lock said today.

In announcing the 2019/20 financial results, Mr Lock said Heritage had been on track to deliver an increased profit despite COVID, highlighting its strong underlying fundamentals.

However Mr Lock said Heritage also recognised the need to be prudent and take steps to cushion the longer-term effects of COVID.

“With that in mind, we took a $7.585 million after-tax credit provision in June, on top of the $416,000 we had incurred in additional COVID-related costs such as extra cleaning, security and advertising,” Mr Lock said.

“That provision has affected our profit result.

“Heritage has recorded an after tax profit in 2019/20 of $36.269 million, which was down 16.2% on the previous year.

“Importantly, setting aside the COVID-related costs, our underlying after-tax profit would have been $44.270 million, up 2.3% on the previous year.

“That’s a fantastic performance in a very difficult operating environment.

“Having taken the provision, our fundamental strength means we’re well positioned to handle the ongoing effects that COVID will have on the Australian economy.”

Mr Lock said there were many positives in Heritage’s 2019/20 financial results.

  • Loan approvals held steady at $1.873 billion, just 0.4% lower than the previous year.
  • Total consolidated assets were $10.739 billion at 30 June 2020, up 6.5% on the previous year.
  • Retail deposits ended the financial year at $7.907 billion, up 8.8% on the balance at the previous year’s end.
  • The Net Interest Margin held steady at 1.89%, while capital adequacy and liquidity ratios both increased.
  • Mortgage loan arrears greater than 30 days dropped to 0.40%, well below industry average levels.

Chairman Kerry Betros said the 2019/20 year’s most significant achievement was the expansion of Heritage’s branch network outside Queensland for the first time.


Heritage opened its first interstate branch at Castle Hill in Sydney in October 2019, followed soon after by another new branch at Parramatta in December.

“This was a truly historic milestone for Heritage – the first branches outside Queensland in our 145-year history,” Mr Betros said.

“The new branches have been warmly welcomed and have performed well.

“Our long-term plans remain to establish more branches in Western Sydney, and in growth regions of Melbourne. However, given the uncertainties of COVID, we’re slowing our rollout plans and will reassess our timeframes when the situation becomes clearer.”

Mr Betros said Heritage would continue to position itself for future success by investing in its digital capabilities, with COVID-19 accelerating the urgency.

“Serving our members means providing both branch services and online banking channels – it’s not one or the other,” he said.

“COVID has definitely accelerated the shift to digital, forcing a lot of traditional branch customers to do their banking online instead for the first time.

“With people switching to digital more quickly, this will also factor into our thinking on future branch rollouts. People love the convenience that digital banking provides, and we will continue to add to our already comprehensive online offerings

“Our recent launch of Apple Pay means we are now one of the few banks in Australia to offer the full range of digital wallets.

“We are also investing in our back office processing systems, with a streamlined loans origination platform expected to go live by the end of this year. This will make the process of applying for a loan with Heritage much simpler and easier, both for customers and our staff.”

Mr Betros said Heritage’s customer-centric culture continued to drive its operations.

“We’re a bank that puts people’s interests first. That’s why we’ve just recorded the highest customer satisfaction scores in J.D. Power’s 2020 Australia Retail Banking Satisfaction Study, as well as topping Australia in Forbes magazine’s 2020 World’s Best Banks List, and scoring highest in the J.D. Power 2020 Australia Bank Brand Authenticity Study.

“We’re genuine about delivering great value and an outstanding experience for our members.”

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