New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

Heartland Group Holdings / Equity Bottom-Up

<h2>Heartland Group Holdings 9M21 Trading Update</h2>
Heartland Group Holdings (HGH) has provided an unscheduled trading update for the nine months to 31 March 2021, siting supportive economic conditions and modest receivable loan growth. Guidance for FY21 was lifted to NZ$85m-$86m (vs. our prior expectations of NZ$82.1m) from prior guidance of NZ$83m-$85m.
Financial update
<ul>
<li>Strong receivables growth – HGH has reported receivable loan growth lifted +13.7% (or NZ$158.6m) reflecting better than expected growth in its Motor, Reverse Mortgage, and Business Intermediated businesses. While HGH attributed a lower cost to income (CTI) ratio (44.1% vs 1H21: 45.9%) to its digital initiatives, we remain cautious regarding its long term cost initiatives.</li>
<li>Push into mortgage lending not yet meaningful – While HGH has made headlines with its 1.99% one-year mortgage rate, this has yet to translate to meaningful receivable growth. It has approved over NZ$580m of loans online, but to date only NZ$30.3m has been drawn (0.6% of its receivable loan book).</li>
<li>Impairment ratio lifts marginally – While buoyant economic conditions have seen impairments remain low versus history, 3Q21 saw HGH’s YTD impairment expense ratio lift to 0.27% (1H21: 0.19%) driven by lower loan repayments during the period.</li>
</ul>

Heartland Group Holdings 9M21 Trading Update
Heartland Group Holdings (HGH) has provided an unscheduled trading update for the nine months to 31 March 2021, siting supportive economic conditions and modest receivable loan growth. Guidance for FY21 was lifted to NZ$85m-$86m (vs. our prior expectations of NZ$82.1m) from prior guidance of NZ$83m-$85m.
Financial update

Strong receivables growth – HGH has reported receivable loan growth lifted +13.7% (or NZ$158.6m) reflecting better than expected growth in its Motor, Reverse Mortgage, and Business Intermediated businesses. While HGH attributed a lower cost to income (CTI) ratio (44.1% vs 1H21: 45.9%) to its digital initiatives, we remain cautious regarding its long term cost initiatives.
Push into mortgage lending not yet meaningful – While HGH has made headlines with its 1.99% one-year mortgage rate, this has yet to translate to meaningful receivable growth. It has approved over NZ$580m of loans online, but to date only NZ$30.3m has been drawn (0.6% of its receivable loan book).
Impairment ratio lifts marginally – While buoyant economic conditions have seen impairments remain low versus history, 3Q21 saw HGH’s YTD impairment expense ratio lift to 0.27% (1H21: 0.19%) driven by lower loan repayments during the period.


Heartland Group Holdings: 9M21 Trading Update