Heritage Bank announces 14th consecutive record pre-tax profit

Heritage Bank has announced a 14th consecutive year of record pre-tax profit in 2012/13.

Heritage today announced unaudited figures that showed a before tax profit of $52.96 million for the year ended 30 June 2013, a 19.4% increase on the previous year.

The after tax profit for 2012/13 was $37.05 million, up 18.5% on the previous year.

The strong profit result includes a gain on sale of Visa shares and fair value adjustments required under Australian Accounting Standards and International Financial Reporting Standards (IFRS). After excluding these items from each year, pre-tax profit has increased by 12.6%.

Heritage also increased its total consolidated assets to $8.507 billion, an increase of 3.5%. This confirms Heritage’s standing as Australia’s largest customer-owned bank.

In announcing these results, Heritage Chairman Mr Kerry Betros said the company’s strong financial performance was good news for customers.

“Our 14th consecutive year of record pre-tax profit reflects the strength of our customer-owned banking model and the value our People first approach delivers for our customers,” Mr Betros said.

“We opened one new branch at Oakey in 2012/13, on top of two in the previous year, and we added 40 new jobs to our workforce during the year. Our total number of staff is now around 750 – all based in Australia.

“We are investing in growing our business at a time when other financial institutions are closing branches, cutting their workforces or even sending jobs overseas.

“Our financial strength enables us to continually improve our business and deliver even better value to customers, through high-quality products, extremely competitive rates and superior personal service.”

Heritage achieved a capital adequacy ratio of 12.81% and a liquidity ratio of 20.31% as at 30 June 2013, well above regulatory requirements.

Total loan approvals in 2012/13 were $1.339 billion, a decrease of 6.7% on the previous year. Retail deposits grew by $336 million to $4.369 billion.

Heritage CEO John Minz said the slight slowing of loan originations was a deliberate business decision given the stricter regulatory framework in place under the Basel III regime.

“Industry is facing pressure to meet more stringent regulatory and prudential requirements post GFC, which means we need to continue making strong profits to meet our capital ratios. Unlike the big banks, we retain all the profits we make at Heritage as capital to underpin our lending to customers.

“As a business, we have also expanded into exciting new niche areas that hold great prospects, particularly in the pre-paid card technology area.

“We are currently working with major companies including Optus and Qantas to help develop new products using our expertise in the area of pre-paid technology and systems.”

Mr Minz said Heritage’s continued low mortgage arrears rate was an outstanding achievement.

“Heritage’s mortgage loan arrears greater than 30 days was 0.31% at 30 June 2013, which is an extremely low rate that is less than a third of the industry average,” he said.

“That achievement speaks volumes about the prudent approach we take to lending and also about the work that we do with customers to make sure they can stay on top of their loan obligations.”

* Home loan comparison rate based on a $150,000 loan over 25 years.  Fixed loan comparison rate applies only for loans with an LVR of 80% or less and a loan amount of $150,000 to $249,999.  WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

Interest rates are on a per annum basis. Rates are correct as stated and subject to change without notice. Rates shown are for new loans and do not apply to switches or internal refinances.

Home Advantage Variable rates include discounts shown from the Standard Variable rate. Home Advantage Living Equity rates include discounts from the Living Equity rate. Discounts are based on total lending in the package. Discount Variable LVR rates are for new lending and include discounts from the Discount Variable Loan Rate.  Discounts are not available in conjunction with any other interest rate discount or special offer. All fixed rates are fixed for the period stated and revert to the variable rate applying at expiration of the fixed term. To approved applicants only. Conditions, criteria and fees apply.

Loan to Value Ratio (LVR) is the loan amount divided by the value of your security property (determined by Heritage Bank at assessment), multiplied by 100. Owner Occupied loans have a maximum LVR of 95%, Investment loans have a maximum LVR of 80% and Living Equity has a maximum LVR of 80%. Heritage is not accepting any new investment applications until further notice.

This advice has been prepared without taking into account your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness having regard to your objectives, financial situation or needs.

Generate a personalised Key Fact Sheet based on your loan amount, term and repayments. This tool is provided to help you compare home loans from Heritage with other financial institutions.