Heartland Group (HGH) H1 2026 earnings summary

Executive summary

• Net profit after tax (NPAT) for 1H2026 was $48.8 million, with underlying NPAT at $46.1 million, marking a strong turnaround from the prior period and significant year-over-year improvement.

• Underlying return on equity (ROE) rose 540 basis points to 7.3%, with average net interest margin (NIM) expanding 51 basis points to 3.92%.

• Asset quality improved, with impairment expense ratio dropping to 0.35% and cost-to-income (CTI) ratio reduced by 304 basis points to 54.6%.

• Strategic reset and technology investments, along with NSA realisation, drove improvements across all key metrics.

• Interim dividend declared at 3.5 cents per share, up 1.5 cps from 1H2025, with a payout ratio of 72%.

Financial highlights

• Net interest income increased to $165.9 million, up 11.3% year-over-year, and net operating income rose by $15.4 million.

• Operating expenses decreased to $94.4 million, while underlying operating expenses rose 4% due to Australian growth and technology investments.

• Underlying EPS was 4.9 cps, up 4.5 cps year-over-year.

• Aggregate receivables grew, with strong growth in reverse mortgages and livestock finance in both NZ and AU.

• Impairment expense fell 74.7% to $12.8 million, with sharp reduction in non-performing loans.

Outlook and guidance

• FY2026 guidance reaffirmed: underlying NPAT of at least $85 million and ROE of at least 7%.

• NIM expected to remain above 3.90% group-wide, with NZ banking NIM above 4.10% and AU banking above 3.70%.

• Underlying OPEX guidance now provided at group and segment level, with CTI ratio targets below 56% for both banks.

• Impairment expense ratios expected to remain low: NZ below 0.70%, AU below 0.10%.

• Regulatory capital requirements for the banking group will be reduced effective 1 March 2026.