Financial services company Heartland Bank has reported a solid lift in its first-half profit driven by increased lending despite a squeeze on margins and rising costs.

The company, which specialises in reverse mortgages, finance for businesses, cars and livestock, and has a stake in the Harmoney loan platform, had a net profit of $39.9 million up 20 percent on the year before.

The company’s lending book grew an annualised 8 percent to $4.6 billion, with growth in some business and consumer lending, and reverse mortgages, but a slight fall in rural lending.

Heartland’s expenses rose 26 percent as it invested in new systems and staff to meet new standards of customer service and marketing in New Zealand and Australia. Bad and doubtful debts fell by a third.

The company said it would continue to focus on its range of niche products to drive growth, with emphasis on digital finance products for consumers and businesses, special partnerships such as finance and insurance for car retailers, and its market-leading reverse mortgage business in Australia.

In the short term this could lead to higher one-off costs, which would translate into earnings in due course.

Heartland said it would be unaffected until 2022 by the Reserve Bank’s decisions requiring banks to start increasing their capital, which come into force from the middle of the year.

The company maintained its full-year profit forecast of between $77m to $80m.

This article was originally published on RNZ and re-published with permission.

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