Heartland reports 24% growth in reverse mortgages

Heartland Group Holdings, the ASX-listed parent company of Heartland Seniors Finance (HSF), has released its full-year financial results for FY19, showing that its reverse mortgage business in Australia is faring well. 

In the 2019 financial year, HSF’s reverse mortgage receivables rose by 24 per cent over the year, or $163 million, to $757.6 million (excluding the impact of foreign exchange and transfers).  

The reverse mortgage lender’s net operating income in FY19 also increased 10.7 per cent year-on-year to $22.7 million, compared to $20.5 million in the previous year.  

However, HSF’s profit (excluding income tax) totalled $12.6 million in FY19, down 22 per cent from $16.1 million in the previous financial year.  

HSF’s reverse mortgage market share in Australia has now increased to 24 per cent, it said. 

“The combination of population demographics, limited active originators and a product focused on simplicity and customer needs, positions Heartland well in the larger Australian market,” the group’s ASX disclosure stated.

“Heartland expects to expand its market share further from its current 24 per cent.”

Across its 15-year history, HSF has reportedly allowed more than 18,000 seniors release more than $1 billion in equity.

The group noted that, to increase leverage and improve capital efficiency, HSF had further diversified its funding base in FY19 by securing a $250 million funding facility, which took its aggregate reverse mortgage loan funding amount to $850 million. 

HSF is also in the process of securing additional funding with a potential new funder, as well as developing a long-term reverse mortgage-backed structure. 

The group said it expects to see continued growth from core lending activities in FY20, particularly in Australian and New Zealand reverse mortgage and small-business lending, alongside the continuation of “a managed reduction in business and rural relationship lending”. 

Heartland Group Holdings also reported that reverse mortgage receivables in New Zealand had also grown 11.4 per cent to $52 million (excluding the impact of foreign exchange and transfers). 

The group commenced trading on the ASX in November 2018 under a foreign exempt listing, following the completion of a restructure through which the group became the parent company of New Zealand-registered bank Heartland Bank and Heartland Seniors Finance.

The restructure saw Heartland’s Australian reverse mortgage business, which was acquired in 2014, freed from the capital requirements of the Reserve Bank of New Zealand, where it was previously operating under.

The group in May announced the appointment of Cherise Barrie to the role of chief financial officer, replacing acting CFO Myles Perry. 

[Related: Heartland Group appoints new CFO]