Heartland NZ sees annual profit of up to NZ$8m v proforma figure of NZ$11m for last year rising to as much as NZ$24m in 2012

Wannabe bank Heartland New Zealand says its June year net profit after tax will be somewhere between NZ$6 million and NZ$8 million, consistent with the building society's guidance, but well down on pro-forma figures for the previous year. However, a rise in profit to as high as NZ$24 million is tipped for the June 2012 year.

Heartland NZ, formed by January's merger between Pyne Gould Corporation's Marac Finance, CBS Canterbury and Southern Cross Building Society, says it'll announce its financial results for the year to June 30 on or before August 19.

"Net profit after tax is expected to be consistent with current market guidance ranging between NZ$6 million to NZ$8 million," Heartland NZ says.

"This result will include substantial one-off costs associated with the successful merger and investment in both the new infrastructure aimed at meeting bank standards and expansion in distribution channels to foster growth. This forecast is subject to finalisation of the year end accounts and audit."

Pro-forma financial information in the merger documents showed Heartland NZ would have recorded a NZ$11.37 million net profit for the year to June 2010.

Heartland NZ says forecast net profit after tax for the year to June 2012, including the proposed acquisition of between NZ$Z$400 million and NZ$430 million worth of PGG Wrightson Finance's good loans, is expected to be between NZ$20 million and NZ$24 million. The PGG Wrightson Finance deal will see the percentage of Heartland NZ's loan book exposed to the rural sector rise to about 23% from just 6% to 7%.

Heartland NZ, which has deposits covered by the extended Crown retail deposit guarantee scheme that's due to expire on December 31, plans to apply to the Reserve Bank for banking registration during the second half of the 2011 calendar year. It aims to become a Christchurch-headquartered "Heartland Bank" doubling its NZ$2.2 billion asset base within five years through growing family, small business and agricultural lending.

In April Heartland NZ said at least 61% of its NZ$1.67 billion worth of retail funding was covered by the Crown guarantee. However, more recently managing director Jeff Greenslade has declined to say what percentage or value of Heartland NZ's deposits have maturity dates beyond December 31, or whether the building society aims to stop offering deposits carrying the Crown guarantee before December 31.

Meanwhile Heartland NZ, which has a BBB- investment grade credit rating from Standard & Poor's, also says it's setting aside NZ$1 million for an employee share plan.