Heartland Bank hit by $49.6m impairment expense

Heartland Group Holdings (NZX:HGH) revealed a $49.6 million impairment expense for its New Zealand subsidiary, Heartland Bank, for the six months ending December 31, 2024. The expense is attributed to the worsening economic climate in New Zealand and a strategic move to derisk certain lending portfolios, particularly within motor finance and business lending. Write-offs account for $20.2 million of the total, while specific provisions contribute $19.4 million, and collective provisions add $10.0 million. The impairment will impact Heartland's net profit after tax (NPAT) for 1H2025, with the company projecting NPAT in the range of $2 million to $5 million. While the Board hasn't decided on an interim dividend, they expect the impairment will not prevent payment. Heartland's Australian operations remain unaffected and continue to perform well. The bank expects to manage Motor Finance and O4B loans currently between 180 and 364 days past due to result in no arrears for this cohort by 30 June 2026.