Highlights

  • HGH’s net interest margin remains stable in Q1; cost-to-income ratio improves in New Zealand operations.
  • Realisation of non-strategic assets surpasses expectations, with major exits completed.
  • Continued growth reported in Reverse Mortgages across New Zealand and Australia.

Heartland Group Holdings Limited (NZX:HGH) has released quarterly update for the three months ended 30 September 2025, with profitability and improved return on equity during the quarter. The company’s net interest margin (NIM) expanded overall, while cost growth stayed contained.
Asset quality improved within Heartland Bank Limited’s Motor Finance portfolio due to enhanced collections and recoveries. However, non-performing loans in Business Finance increased amid soft business conditions in New Zealand, though improvement is anticipated in Q2. Seasonal patterns in Livestock Finance also temporarily affected Heartland Bank Australia Limited’s NPL ratio, which is expected to rebound in Q2.
Reverse Mortgages across both banks continued to grow, whereas other lending portfolios were held back by weaker market activity and seasonal trends.

Non-Strategic Asset Realisation
Heartland accelerated the realisation of its non-strategic assets during Q1, outperforming internal targets. Key actions included:

  • Partial settlement and unconditional refinancing of the largest Relationship exposure in October 2025.
  • Full repayment of the third-largest Relationship exposure in early October 2025.
  • Faster-than-anticipated reduction of Home Loans through early repayments.
  • Unconditional sale of a dairy farm property, with settlement due in October 2025.
  • Exit of Harmoney Corp Limited shareholding, delivering a fair value gain of NZD 3.1 million.
  • Sale of Heartland Bank Australia’s stake in Alex Bank, settled in October 2025.
    By the end of CY2025, Heartland expects the total value of NSAs to drop to NZD 179.5 million, a 66.6% reduction from June 2024.

New Zealand Banking
Heartland Bank’s Q1 NIM stood at 4.06%, consistent with Q4 FY2025 on a like-for-like basis. Underlying operating expenses decreased by NZD 2.4 million to NZD 31.1 million, improving the cost-to-income ratio to 52.4%.
The impairment expense ratio eased to 0.61%, while total NPLs declined by NZD 3.5 million to NZD 148.2 million since June 2025. Excluding NSAs and unsecured lending, the NPL ratio fell to 2.36%.
Motor Finance arrears remained below industry averages, while late-stage arrears improved further. Reverse Mortgage receivables rose 14.0% to NZD 1,276.9 million, whereas Motor Finance receivables edged down 2.5% to NZD 1,683.6 million.

Australia Banking
Heartland Bank Australia’s NIM increased by 15 bps in Q1 to 3.62%, with an exit NIM of 3.50%. Operating expenses rose by AUD 1.7 million to AUD 13.8 million, lifting the cost-to-income ratio to 48.1%.
Reverse Mortgage receivables grew 17.2% to AUD 2,066.3 million, while Livestock Finance receivables dropped 34.7% to AUD 231.7 million, reflecting seasonal variation. The NPL ratio climbed to 3.09% but is expected to return to more typical levels in Q2.
In October 2025, Heartland Bank Australia fully repaid its remaining AUD 100 million medium-term note ahead of schedule, replacing it with lower-cost deposit funding.

Share Performance  

The company is currently trading at NZD 1.09 and up by 2.36% from its previous close of NZD 1.06.