Strong Heritage Bank half-year profits

A strong underlying performance combined with a number of abnormal items to deliver a 32.5% increase in pre-tax profit for Heritage Bank in the six month period to December 2012.

The pre-tax profit of $27.887 million was up from $21.054 million in the same period the previous year.

A significant portion of this profit increase came from gains made on the sale of Visa shares and fair value adjustments required under Australian Accounting Standards and International Financial Reporting Standards (IFRS).

Excluding these abnormal items, underlying profit for the period was still very strong, rising 16.3% to $23.855 million compared to $20.511 million in the corresponding period in the previous year

The after-tax profit of $19.558 million was also up 32.7% on the same period last year.

Chairman Mr Kerry Betros said Heritage's focus on providing the best possible rates, products and services to customers had delivered in the market place.

"Our good results demonstrate the strength of our operations and the value customers see in our customer-owned business model," he said

"Our success is built on the fact that we focus on what's best for our customers by offering extremely competitive rates on a full suite of banking products and the kind of personal service that sets us apart.

"We don't have the scale of the big banks, so we have to simply offer customers a better banking experience that pays off for them in the hip pocket and in their level of satisfaction."

Loan approvals for the half-year increased markedly to $804.94 million, up 41.5% from the $568.94 million in the same period the previous year.

CEO Mr John Minz said a number of factors contributed to this increase.

"In early 2012 we expanded our mortgage broker network into Western Australia, Tasmania and the Northern Territory to give us nationwide coverage. We have quickly gained a firm foothold in those markets. We opened two new branches in 2012, which has also helped increase our lending levels.

"In addition, we launched a new discount variable lending product with an extremely competitive rate that proved exceptionally popular, and there were market conditions in the corresponding period in 2011 that negatively affected lending."

Retail deposits also grew significantly, up 47.8% to $303.52 million growth from $205.32 million in the same period in 2011. Consolidated assets grew 0.6% to $8.271billion compared to $8.221 billion at 30 June 2012.

"The increase in our retail deposits was a remarkable achievement in an environment where our competitors were competing fiercely on term deposit rates for a share of domestic investment funds.

"Our ability to be flexible and act quickly in response to market conditions is another factor that enables us to perform consistently well in attracting and retaining investors."

Heritage's capital adequacy ratio of 12.14% and liquidity ratio of 18.02% remain well above regulatory requirements.

Mortgage Loan arrears greater than 30 days decreased slightly to sit at just 0.44% of the total mortgage portfolio balance. This result is still the envy of most other banking institutions and is around one third the industry average.

* 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.

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