Heartland Group (HGH) Investor presentation summary

Impact of recessionary environment

• NZ experienced the largest six-month GDP fall since 1991 (excluding COVID-19), with unemployment rising to a four-year high of 5.1%.

• Company liquidations increased 39% year-on-year, and financial hardships rose 19% year-on-year.

• Consumer defaults rose 39% annually, and business defaults increased 22% annually.

Impairment expenses and provisions

• Impairment expense for 1H2025 was $49.6m, including $20.2m in write-offs and $19.4m in specific provisions.

• Collective provisions of $10.0m were made for Motor Finance, O4B, and Asset Finance.

• 1H2025 NPAT is expected to be $2m–$5m, pending audit completion.

• Bank remains well-capitalised with strong liquidity, and AU operations are unaffected.

Portfolio performance and arrears

• Motor Finance and O4B portfolios saw increased arrears and non-performing loans, with Motor Finance 90+ DPD write-offs impacting results.

• Asset Finance and Business Relationship portfolios also experienced elevated arrears and NPL ratios.

• NZ Reverse Mortgage and Livestock Finance portfolios maintained strong credit quality.