Heartland reverse mortgages grow 20%, online-only home loans sink

The bank's New Zealand reverse mortgage book rose by $180 million, or 20.2%, to $1.07 billion while its Australian book grew by 19.7%, or A$276 million, to A$1.67 billion.

Unfortunately, Heartland provided far less information than it has previously and it changed from reporting the Australian reverse mortgage book in NZ dollars to Australian dollars.

It did provide NZ dollar figures in its chart showing what happened to receivables across all its activities and that showed the increase in the Australian reverse mortgage book was NZ$298 million the first-half report showed a NZ$153 million increase, implying the second half increase was NZ$145 million.

The financial statements break out the different activities for NZ, although the online-only home loans are presumably captured in “other,” and there's no breakdown for Australia.

The only mention in Heartland's media release of thee online-only home loan offering, which the first half results showed growing 5.6%, was that its “portfolio is similarly robust with a low arrears rate of 0.4%.”

Heartland didn't say what the online-only book was at June 30.

That was in the context of the NZ reverse mortgage book having a weighted average loan-to-valuation ratio (LVR) of 23.5%. That's up from 22.8% at Dec 31 and from 21,3% at June 30 last year.

NZ reverse mortgages with LVRs above 75% went from zero at both June 30 and Dec 31 last year to two at June 30 this year, accounting for 0.1% of the book.

The average age of NZ reverse mortgage borrowers fell to 77 years from 78 previously and the average loan size is now $141,183 compared with $128,938 a year earlier.

LVR at origination has dropped to 9.1% at June 30 from 9.8% a year earlier.

In the Australian reverse mortgage book, the average loan has risen to A$188,756 from NZ$180,432 a year earlier while the weighted average LVR has risen to 23.5% from 21.5%.

Those with LVRs above 75% rose to two from one a year earlier.

Heartland's net profit for the year ended June 30 fell 22.2% to $74.5 million with the underlying result coming in at $102.7 million, down 6.7% and below guidance of between $108 million and $112 million.

Chief executive Jeff Greenslade said that reflected an extra $10.1 million of provisions taken late in the year following “a sudden and deep deterioration emerging in May and June.”

Charges against profit for bad debt doubled to $46.4 million from $23.2 million the previous year.

Greenslade said the peformance of the reverse mortgage books showed their “ability to perform in good times and bad.”