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Heritage reports profit fall despite 20% loan growth

A 20 per cent rise in loan approvals had not been enough to prevent the member-owned bank from posting a 4 per cent decline in its net profit.

Heritage Bank has released its 2019 half-year (HY19) financial results, reporting an increase in loan approvals of $963.5 million in the six months to 31 December 2018, up 20.3 per cent from the $800.8 million approved in the previous corresponding period.

Net loan growth of $164.85 million was reported over the six-month period, a rise of 271.6 per cent on the $44.3 million recorded in HY18.

Heritage also recorded retail deposit growth of $192.3 million in HY18, an increase of 56.5 per cent from $122.8 million in HY18.

However, despite the rise in loan approvals and the boost in deposit numbers, Heritage Bank’s net profit after tax (NPAT) dropped 4.2 per cent, from $26.2 million in HY18 to $25.1 million.


Heritage CEO Peter Lock maintained that the profit result was strong amid challenging market conditions.

“This was a very solid profit outcome for our customers, driven by disciplined expense management and effective capital allocation decision-making,” Mr Lock said.

“Our business is strong, and we have also been able to provide customers with great value, great products and great service. That’s what a customer-owned bank is all about. 

“We have also managed to secure a significant uplift in loan volumes, despite difficult market conditions characterised by falling property prices in certain geographies and a slowdown in credit growth across the banking sector.”

He added: “The ongoing commitment to our customers and our branch network is reflected in our ability to attract consistent growth in retail deposits.”


Mr Lock said that the bank remains committed to strengthening its position in the market.  

“We’ve achieved excellent half-year results while continuing to drive an ongoing transformation program and to invest in upgrading our core capabilities,” Mr Lock said.

“We’re improving and updating our technology platforms to better cater for the banking needs of today’s customers.

“Our balance sheet is now well positioned to enable us to move forward with the next phase of our transformation program.”

Heritage has also recorded a capital adequacy ratio of 14.48 per cent and a liquidity ratio of 14.85 per cent as at 31 December 2018, with consolidated assets also increasing, rising to $9.7 billion.

Heritage chairman Kerry Betros lauded the bank’s “robust” capital and liquidity levels.

Mr Betros also claimed that arrears across the bank’s mortgage book remain “well below market levels” amid a 20 basis point increase from 0.58 per cent to 0.78 per cent.

The chairman stated that the bank would continue to work on its strategic objective to attract more customers by offering customers with an alternative to the embattled major banks.  

“We will continue to pursue our strategic objective to attract more customers to enjoy the advantages that come from banking with customer-owned organisations such as Heritage,” he said.

“We hope that the revelations at the Hayne royal commission of poor practices at the big banks will open people’s eyes to the value of the customer-owned option as a genuine alternative.

“We offer a proven banking model that’s safe and secure while also giving customers better value and a more satisfying banking experience.”

Mr Betros concluded: “There is no conflict for us in who we serve – customers always come first.”

[Related: MyState profits dragged down by funding costs]

Heritage reports profit fall despite 20% loan growth
Heritage Bank

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