Heritage Bank lending down by $60m

According to the unaudited financial results for the 2015/16 year, released this week, loan approvals were down by 3.26 per cent on last year’s levels, falling from $1.84 billion to $1.78 billion.

Nearly a billion dollars of loan approvals ($970 million) came during the second half of the year, after the bank made “a concerted focus on growth in the six months to June”, according to CEO Peter Lock.

Similarly, the bank saw retail deposits rise by $294 million (6.05 per cent) to $5.16 billion, with more than half ($183 million) coming in during the second half of the year.

Mr Lock said that the momentum in the six months to June “resulted in annualised growth in [the bank’s] mortgage portfolio of 7.1 per cent for the second six months of the year, which was above the Reserve Bank’s reported system average of 6.7 per cent”.

However, total consolidated assets were marginally lower, down from $8.56 billion to $8.44 billion.

Mr Lock said: “Our strategy is definitely to boost our loan volumes in coming years and grow the business as a whole, bearing in mind the need to meet our prudential regulatory requirements in terms of capital.

“Our success in achieving higher growth in the latter half of the year illustrates how well we can perform when we align our organisational efforts toward a key strategic goal. That positions us well to continue pursuing our growth agenda in future.”

In all, the bank saw a 6.46 per cent increase in pre-tax profit, rising to $51.11 million. After tax profit came in at $36.14 million, up 7.53 per cent on the $33.61 million made in 2014/15.

Heritage’s mortgage loan arrears greater than 30 days was 0.30 per cent at 30 June 2016, below the industry average, while its capital adequacy ratio at 30 June 2016 was 13.95 per cent and its liquidity ratio was 15.94 per cent.

According to chairman Kerry Betros, the bank will continue to invest in IT improvements to “better position Heritage for the demands of the digital world” and help it grow its loan book and overall business.

He also said that the customer-owned bank’s new corporate vision is to “be passionate about helping people”, while its corporate mission is to “deliver a great customer experience every time”.

“That’s what we’re all about and that’s where we’re different to the big banks, whose focus is to generate financial returns for their shareholders”, he said.

Mr Betros welcomed the results of independent analysis by research company CANSTAR, which found that Heritage’s customers were $50 million a year better off in 2015/16 through banking with Heritage rather than one of the big four banks.

“That’s a compelling demonstration of how banking with a customer-owned organisation provides tangible benefits for our customers”, he said.

“Because we’re customer-owned, we’re different. Not only is our goal to give customers great value, but we invest heavily back into the community. That’s what mutuals are all about.”

[Related: Heritage Bank names new CEO]