Heartland Investor Day Presentation

Heartland Investor Day – 19 November 2018 | Page 1
Heartland Investor Day
19 November 2018

Heartland Investor Day – 19 November 2018 | Page 2
Agenda
9:00am Welcome
Business and strategic update
Jeff Greenslade – CEO
9:15am 2019 Q1 Results David Mackrell – CFO
9:30am Reverse Mortgages Andrew Ford – CEO, Heartland
Seniors Finance
10:30am Morning tea break
10:45am Financial & Regulatory update David Mackrell – CFO
11:15am Motor, Business, Rural Chris Flood – Deputy CEO
12:00pm Digital initiatives Jeff Greenslade – CEO
12:30pm Closing remarks & final Q&A Jeff Greenslade – CEO
Geoff Ricketts – Chair
1:00pm Lunch

Heartland Investor Day – 19 November 2018 | Page 3
Welcome
Business and strategic update
Jeff Greenslade, CEO

Heartland Investor Day – 19 November 2018 | Page 4
Strategic Management Group
Jeff Greenslade
CEO
Chris Flood
Deputy CEO
Laura Byrne
Chief People & Culture Officer
Grant Kemble
Chief Risk Officer
David Mackrell
CFO
Rochelle Moloney
Chief Marketing &
Communications Officer
Sarah Smith
Chief Technology &
Enablement Officer
Lydia Zulkifli
Chief Digital Officer

Heartland Investor Day – 19 November 2018 | Page 5
Technology in Banking
Heartland Group – threefold strategic focus
Australia
Opportunity to be the leading reverse
mortgage provider
Able to fund Australia reverse
mortgage growth directly
Local and offshore capital markets
under development
Increase use of marketing campaigns
New Zealand
Banking
Deposit raising
Five core lending activities :
Reverse Mortgages, Motor,
SME, Livestock, Harmoney
Manage down large relationship
legacy Rural and Business loans
Increase efficiency through
Automation
Digital Platform
Services
Open for Business
Mobile App
Automated deposit platform
New Markets

Heartland Investor Day – 19 November 2018 | Page 6
•Highest Net Interest Margin among our bank peers
•Resulting in highest Return on Assets
•Competitive Return on Equity
•Highest growth rate in Gross Loans and Advances (Net Finance Receivables) –
2.7% in the June quarter and 12.3% year on year
Source: Reserve Bank of New Zealand Financial Strength Dashboard, quarter ending 30 June 2018
Heartland’s point of difference

Heartland Investor Day – 19 November 2018 | Page 7
FMA & RBNZ report on bank conduct
and culture in New Zealand
•Report focusses on the industry as a whole, rather
than specific banks.
•Makes a number of findings which have been divided
into four key themes.
•The report concluded that there does not appear to
be widespread conduct and culture issues in NZ
Banks.
•We are reviewing the findings in order to determine
its specific application to Heartland.
•We support the work that the regulators are doing in
this area, and believe that a focus on good customer
outcomes, conduct and culture are key components
of sustainable successful businesses.

Heartland Investor Day – 19 November 2018 | Page 8
2019 Q1 Results
David Mackrell, CFO

Heartland Investor Day – 19 November 2018 | Page 9
2019 Q1 Results – September 2018
Net operating income
3 months to 30 Sept 2018
$51.4m
9.9% from Q1 Sept 2017
Other Highlights
•Net finance receivables increased to $4.1bn – 10.2% annualised growth from 30 June 2018
•NIM 4.44% – up from 4.42% as at 30 June 2018
•Cost to income ratio decreased to 40.48% – down from 40.87% for the year to 30 June 2018
•Impairment expense ratio increased to 0.61% – up from 0.59% for the year to 30 June 2018 due
to change in product mix and change of provisioning methodology under IFRS9
•Q4 June 2108 benefited from a gain due to one-off property sales
•Return on equity 10.9% – down from 11.1% as at 30 June 2018
(4.4)% from Q4 June 2018
Net profit after tax
3 months to 30 Sept 2018
$17.4m
8.7% from Q1 Sept 2017
(7.9)% from Q4 June 2018
Net finance receivables
As at 30 Sept 2018
$4.1bn
11.0% from 30 Sept 2017
10.2% annualised growth
from 30 June 2018

Heartland Investor Day – 19 November 2018 | Page 10
Net Receivables movement

Heartland Investor Day – 19 November 2018 | Page 11
Impairments
•Impairment expense $6.2 million ($5.1 million for 3 months ended 30 Sept 2017
and $5.9 million for 3 months ended 30 June 2018).
•Impairment expense ratio 0.61% (0.56% for 3 months ended 30 Sept 2017,
0.59% for the year ended 30 June 2018).
•Impairments increased due to growth in net finance receivables (10.2%
annualised growth in the quarter), combined with additional provisioning under
IFRS 9 as a result of providing for impairments earlier than previously required.
Non performing Loans (NPL)
30 Sept 2018
($m)
30 June 2018
($m)
YTD Change
($m)
Total past due >90 days 29.2 28.7 0.5
Total impaired 44.2 45.2 (1.0)
Non performing loans 73.4 73.9 (0.5)
Gross finance receivables 4,147.5 4,017.4 130.1
Gross NPL ratio 1.77% 1.84% (0.07%)
Impairment expense ratio 0.61% 0.59% 0.02%

Heartland Investor Day – 19 November 2018 | Page 12
Impacts of IFRS9 on provisions and
impairment expense
•Adjustment to provisions of $20-25 million with resulting impact on Equity of
$14-18 million.
•Provisioning commences automatically from loan origination
–Expected losses expensed from day 1.
–Results in increased impairment expense due to growth in receivables.
•Asset quality changes impact on impairment expense immediately
–Provisioning models automatically increase provisions for asset quality
deterioration. i.e.; if there is a growth in the amount of loans in 90 days
and overdue, then the provision in increased and impairment expense
recorded.

Heartland Investor Day – 19 November 2018 | Page 13
Growing balance sheet
•10.2% annualised growth in net finance receivables
•13.1% annualised growth in retail deposits
Summary Balance Sheet 30 Sept 2018 ($m) 30 June 2018 ($m) Movement ($m)
Net finance receivables 4,087.5 3,984.9 102.6
Other assets 508.8 511.0 (2.2)
TOTAL ASSETS 4,596.3 4,495.9 100.4
Retail deposits 2,977.1 2,881.8 95.3
Other borrowings 943.9 914.2 29.7
Other liabilities 35.1 35.7 (0.6)
Equity 640.2 664.2 (24.0)
TOTAL EQUITY & LIABILITIES 4,596.3 4,495.9 100.4

Heartland Investor Day – 19 November 2018 | Page 14
Movements in Equity
Heartland Bank Limited $m
Balance as at 30 June 2018 664.2
Profit for the period ended 30 Sept 2018 17.4
IFRS 9 Adjustment (17.9)
Dividends paid (30.8)
Dividend reinvestment plan 8.6
Movement in reserves (1.3)
Balance as at 30 June 2018 640.2

Heartland Investor Day – 19 November 2018 | Page 15
Reverse Mortgages
Andrew Ford, CEO Heartland Seniors Finance

Heartland Investor Day – 19 November 2018 | Page 16
Agenda
•Overview
•Strong Growth and Momentum
•Market Insights
•Heartland Reverse Mortgage Product
•Portfolio Analysis
•ASIC Review
•Typical Customer
•Summary

Growing need...
Over 20,000 Australians turn 65
every month and the number of
New Zealanders aged 65+ is
expected to increase by 80%
between 2016 - 2036.

Australian Bureau of Statistics and 2015 Australian
Government Intergenerational report and Stats NZ
National population projections

Heartland Investor Day – 19 November 2018 | Page 17
Overview
•Australasia’s leading reverse mortgage provider
•Purchased by Heartland on 1 April 2014
•NZ$1,130m in net finance receivables
•Assisted over 30,000 seniors across New Zealand
and Australia live a more comfortable retirement
•Market leading product
•A heavily regulated consumer finance product in
Australia
•Robust process and considerable customer
protection
•Distributed direct and via brokers
Reverse mortgages are a core
product for Heartland, making
up 28% of finance receivables
and growing strongly.

Heartland Investor Day – 19 November 2018 | Page 18
18
Strong Growth and Momentum
•Compound annual growth rate of
18% in Australia and 11% in NZ over
the last three years
•Net operating income was $38.1m
for FY18, up 28%
•Receivables grew 12% in NZ and
25% in Australia
•Expect growth to continue at similar
rates in FY19
•Scalable product

Heartland Investor Day – 19 November 2018 | Page 19
Market Insights
•Only material provider in NZ
•More mature and competitive market in Australia
•Competitors exiting – Westpac, Macquarie (both mid 2017), and CBA have
announced exit effective 1 January 2019. A few non-major bank
competitors remain
•Australia Government Pension Loans Scheme assists to create awareness
and provides validity
•Creates opportunity for specialist provider
•There is over A$3bn of reverse mortgage loans in Australia
1
•Heartland has a 19.8% market share
1
in Australia,
up from 14.9% at 30 June 2017 and 13.1% at
30 June 2016
•Biggest challenge is to increase awareness and
understanding of the product
10.8% of Australian consumers
aged 65+ have problematic
credit card debt.

ASIC Credit card lending in Australia - Report
580 July 2018
1. Based on APRA ADI Property Exposure statistics, plus Heartland Seniors Finance, as at 30 June 2018

Heartland Investor Day – 19 November 2018 | Page 20
Heartland Reverse Mortgage Product
•Market leading, award winning, product
•Researched internationally for best product and
processes
•Flexible product for customers’ circumstances
•Considerable consumer protection
•Socially responsible with a thorough fulfilment process
•Controls throughout process
•Heavily regulated under National Consumer Credit
Protection Act (NCCP) in Australia:
•Independent legal advice is mandatory
•Enquiry around future needs including aged care
•Projection provided to customers to assist understanding
•Alternative options outlined, such as downsizing
•Heartland voluntarily adheres to these
requirements in New Zealand

Heartland Investor Day – 19 November 2018 | Page 21
Portfolio Analysis
HSF Australia Book as at 30/6/18 (AUD)
Loan Book Size $619m
FY18 Growth $125.7m (25%)
(FY17 18%)
Avg Loan Size $120k
Weighted Avg LVR (indexed
adjusted valuation)
25%
Weighted Avg Age of Youngest
Borrower
77 (74 for new
business in FY18)
Initial LVR 12% (11% in FY18)
Avg Original Property Value $557k ($842k in FY18)
% of book over 75% LVR
(indexed adjusted valuation)
0.3%
(5 loans for $1.75m)
Weighted Age of Book 6.1 years
Repayments received in FY18 $66m
Avg Outstanding at Discharge
(FY18)
$113k
Avg LVR at Repayment
(based on original valuation)
27%
Avg Term at Repayment 6.6 years
HSF NZ Book as at 30/6/18 (NZD)
Loan Book Size $453m
FY18 Growth $49.8m (12%)
(FY17 11%)
Avg Loan Size $100k
Weighted Avg LVR (indexed
adjusted valuation)
25%
Weighted Avg Age of Youngest
Borrower
78 (73 for new
business in FY18)
Initial LVR 11% (11% in FY18)
Avg Original Property Value $438k ($570k in FY18)
% of book over 75% LVR
(indexed adjusted valuation)
0.0%
(1 loans for $80k)
Weighted Age of Book 7.1 years
Repayments received in FY18 $62m
Avg Outstanding at Discharge
(FY18)
$113k
Avg LVR at Repayment
(based on original valuation)
33%
Avg Term at Repayment 7.5 years

Heartland Investor Day – 19 November 2018 | Page 22
Portfolio Analysis – by LVR
Portfolio
•Average weighted LVR 25%
•90% of loans have an LVR under 40%

Outliers
•Only 36 loans with LVR over 60%
(0.8% of book)
•Average age of these loans is 11.8
years
•Average youngest borrower age for
these loans is 88
•Security gets revalued when the loan
reaches LVR ratio of 70%, which has
generally resulted in a reduction in
LVR
Outliers
No. of Loans
$M%
>60% and <= 65%3.4 0.3%14
>65% and <= 70%2.5 0.2%12
>70% and <= 75%1.5 0.1%4
>75% and <= 80%0.1 0.0%1
>80% and <= 85%1.1 0.1%3
>85% and <= 90%0.2 0.0%1
>90% and <= 95%- 0.0%-
>95% and <= 100%- 0.0%-
>100%0.6 0.1%1
Total > 60%9.4 0.8%36
Based off indexed adjusted valuation
Current Loan Bal ance
LVR

Heartland Investor Day – 19 November 2018 | Page 23
Portfolio Analysis – by LVR (cont.)
Low initial LVR
•Average initial LVR of 12% (FY18 11%)
•Draw a lump sum and have funds set
aside for future needs via a ‘line of
credit’ or receive a Regular Advance
•~10% borrow upfront maximum
available
•LVR based off age at approval. Any
increase requires new application
and valuation
Negative Equity Risk Assessed Quarterly
•An independent monitoring and valuation report is completed quarterly
•Analysis includes various stress test scenarios including property price fall
and interest rate increase

Heartland Investor Day – 19 November 2018 | Page 24
Portfolio Analysis – by Location
Deep Property Markets
•Lending standards focus on areas
with deep property markets
•60% of Aus portfolio in capital cities
•43% of Aus portfolio in Sydney and
Melbourne
•59% of new business since
acquisition has been in Sydney &
Melbourne
•56% of NZ portfolio in top 5 cities
•Limited exposure to smaller markets

Heartland Investor Day – 19 November 2018 | Page 25
Portfolio Analysis – by Age
Seasoned Portfolio
•Weighted average loan age is
6.5 years
•Average term at repayment
(FY18) 6.6 years in Aus and 7.5
in NZ
•Weighted average age of
youngest borrower is 77.5 years
old
•51% of loans are to joint
borrowers, 34% sole female and
15% sole male

Heartland Investor Day – 19 November 2018 | Page 26
Portfolio Analysis – by Size
Concentration Risk
•Average loan size $117k
•Average original loan $62k
•Only 7 loans over $1m (in local
currency)
•Average LVR on these loans is 31%
with highest 46%

Heartland Investor Day – 19 November 2018 | Page 27
Portfolio Analysis – Repayments
Steady Repayments – Cash flow Positive (excl. new business)
•Weighted median term is 7.4 years (where more than 50% of loans have been repaid)
FY18 Experience -
•Australia - $66m of repayments ($33m interest charged)
•NZ - $62m of repayments ($30m interest charged)
•In Australia 77% of FY18 full repayments were voluntary (e.g. downsizing)
•Average LVR on repayment, was 27% (Aus) and 33% (NZ) based on original valuation

Heartland Investor Day – 19 November 2018 | Page 28
ASIC Review of Reverse Mortgage Lending
•Report released 28 August 2018 after ~18 month review
•Thorough and balanced, highlighting growing need for equity release product
•Report finds that reverse mortgages help older Australian achieve their immediate
financial objectives and that customers are satisfied
•ASIC wants to see improved lending practices, specifically related to:
oPotentially unfair contract terms
oImprove long term consumer outcomes by assisting borrowers make informed decisions
about future needs
oTakes steps to detect and prevent elder abuse
•Heartland has made a number of changes since the review commenced
•Heartland has accepted an invitation to participate
in a working group to improve lending practices
•No material impact on business
“Reverse mortgage products can help
many Australians achieve a better
quality of life in retirement”
ASIC Deputy Chair Peter Kell 28/8/18

Heartland Investor Day – 19 November 2018 | Page 29
Typical Customer
•Joint borrowers (51%) / sole female (34%) /
sole male (15%)
•75 years old
•Have depleted super and other assets
•Receive pension
•Reside in Auckland, Sydney, Melbourne,
Brisbane, Coastal NSW / QLD
•Property worth $775k
•LVR at origination of 11%, with further funds
set aside in a ‘line of credit’ and/or drawn via
a Regular Advance
•Uses include for renovations, travel, medical
expenses, car, aged care, debt consolidation,
mortgage refinance, support next generation,
everyday bills, etc.

Heartland Investor Day – 19 November 2018 | Page 30
Case Study
•Jack 74 and Bev 70
•Home value: $800,000
•Max loan amount: $200,000 (based on Bev’s age - 25%)
•Initial Borrowing: $100,000 (including fees)
•Payoff a current mortgage
•Some home improvements
•Remaining available facility: $100,000
•Drawdown additional $15k, two years after taking loan for a holiday with grandkids
•Drawdown additional $15k, four years after taking loan for medical expenses
•Still have $70k available for future expenditure or unforeseen expenses
Projection
Loan (7% int. rate) Property Value (3% growth rate) Equity Remaining
5 Years $176,000 $927,000 $751,000
10 Years $250,000 $1,075,000 $825,000
15 Years $354,000 $1,246,000 $892,000

Heartland Investor Day – 19 November 2018 | Page 31
Our most recent Australia customer survey showed:
•96% of customers would recommend Heartland to friends and family; and
•94% said they would recommend taking out a reverse mortgage.
“Peace of mind”
“Given us the freedom to do so many things”
“Financial pressures eased”
“You are a lifesaver”
“Maintain my independence”
Customer Stories

Heartland Investor Day – 19 November 2018 | Page 32
Summary
•Australasia’s leading provider
•Award winning and socially responsible product
•Heavily regulated with robust and thorough fulfilment process
•Considerable customer protection and controls
•High quality portfolio
•Strong growth achieved and momentum
•Growing market and increasing demand
•Scalable

| Page 33
Questions

Heartland Investor Day – 19 November 2018 | Page 34
Reverse Mortgages – Stress Testing
David Mackrell, CFO

Heartland Investor Day – 19 November 2018 | Page 35
$
$
$
$
$
$
TIme
Loan balanceSecurity value
Product and Key Risks
•Potential loss arises from the interplay between interest capitalising
to the loan balance, the value of the security property through time,
and loan exit (repayment date).
•The borrower can never owe more than the net sale proceeds of the
security property.
•Heartland fair values its reverse mortgage portfolios using actuarial
analysis which takes into account these risk factors under stressed
conditions.





Key Risk Risk Details Mitigating factors
LVR at Origination Sets the base upon which interest capitalises over
the life of the loan.
•
Conservative origination criteria , max LVR = borrower age less 45. The average
origination LVR of NZ and AU combined is 12%.
•
Conservative borrowers who draw on average 50% of this maximum.
•
Prudent underwriting criteria in relation to property condition, location, character.
Interest Rate No repayments are required during the loan
period with interest capitalising to the loan over
time. This exposes the size of the loan to potential
interest rate movements.
•
Variable interest rates provide pricing discretion.
•
Lending rate is matched with funding rate
House Price Inflation Impacts the value of the security property and
therefore the net sale proceeds on loan exit.
•
Long run HPI in Australia and New Zealand has been 7.0% and 6.3% respectively
(from 1987 to 2017)
1
.
•
The largest single annual decrease in a major Australian or New Zealand city has
been below 10%, with short recovery periods.
Repayment Date The loan is only repayable when the borrower
ceases to reside in the security property, this may
be due to mortality, move to aged care, or
voluntary.
Since the business’ inception:
•The majority of repayments are voluntary (AU 80%, NZ 72%).
•The mean term of all fully repaid loans is 4.8 years in Australia, and 5.3 years in
New Zealand.
•The weighted median term for years where more than 50% of loans have repaid is
7.4 years in both Australia and New Zealand.
A regular stream of partial repayments is also experienced.
1
PWC
potential loss
“cross-over” point

Heartland Investor Day – 19 November 2018 | Page 36
•We examine three interest rate and house price inflation (HPI) scenarios to determine the impact on loan balance
and security value for an individual loan, and the resulting potential losses.
•Each scenario assumes the borrower age is 69, with a security value of $1m. Outcomes are presented assuming the
borrower is advanced either 50%, or 100% of the eligible amount (based on the age - 45 LVR criteria on origination).

1. Base Stress – historic Australian housing and interest rate markets
•Security value - A 10% initial decline in security value
1
followed by 2% p.a. HPI thereafter
2

•Loan balance - Interest capitalises to loan based on current margin over BBSW, applying a
forward interest rate curve for BBSW over time.

2. Irish Stress – Irish housing crisis between 2008 and 2017
•Security value - A 70% decline in security value during the first 5 years, followed by a
45% recovery over the following 5 years (net 10 year decline of 25%). 2% p.a. HPI thereafter.
•Loan balance - Interest capitalises to loan based on current margin over BBSW, applying a
forward interest rate curve for BBSW over time.

2. AAA Stress - S&P criteria to achieve a AAA rating
•Security value - A 35% initial decline in security value with 0% HPI thereafter (i.e. no recovery).
•Loan balance - Interest capitalises to loan based on current margin over BBSW, applying the
current S&P “Up” interest rate curve for BBSW.

Reverse Mortgage Stress





1
Consistent with the single largest annual property price decline for a major Australian city index in Australian recorded history.
2
Less than half the long run average in Australian recorded history
-40%
-30%
-20%
-10%
0%
10%
20%
0%
2%
4%
6%
8%
10%
12%
Annual HPI
BBSW 3M
Time
BBSW 3M - lhsAnnual HP - rhs
-40%
-30%
-20%
-10%
0%
10%
20%
0%
2%
4%
6%
8%
10%
12%
Annual HPI
BBSW 3M
Time
BBSW 3M - lhsAnnual HPI - rhs
-40%
-30%
-20%
-10%
0%
10%
20%
0%
2%
4%
6%
8%
10%
12%
Annual HPI
BBSW 3M
Time
BBSW 3M - lhsAnnual HPI - rhs

Heartland Investor Day – 19 November 2018 | Page 37
Base Stress Outcomes


•50% of Maximum Eligible LVR (12%) = No loss experienced:
-Conservative LVR on origination
-Moderate Year 1 HPI stress
-Long run HPI while modest, compensates for initial HPI decline over Year 1

•100 % of Maximum Eligible LVR (24%) = Loss experienced from 98 years of age, 29 years following loan origination:
-Considered a very unlikely scenario
-80% of repayments are voluntary and average loan term is 4.8
1
years
-Survival probability for a 69 year old male to reach 98 is 4.3%
-At 100 years of age the loss/loan balance
2
is -12% (2% survival probability)







$0.0m
$0.2m
$0.4m
$0.6m
$0.8m
$1.0m
$1.2m
$1.4m
$1.6m
69 years70 years71 years72 years73 years74 years75 years76 years77 years78 years79 years80 years81 years82 years83 years84 years85 years86 years87 years88 years89 years90 years91 years92 years93 years94 years95 years96 years97 years98 years99 years
100 years
Borrower age
50% of Maximum Allowable LVR at Origination
Loan balanceSecurity value
$0.0m
$0.2m
$0.4m
$0.6m
$0.8m
$1.0m
$1.2m
$1.4m
$1.6m
$1.8m
69 years70 years71 years72 years73 years74 years75 years76 years77 years78 years79 years80 years81 years82 years83 years84 years85 years86 years87 years88 years89 years90 years91 years92 years93 years94 years95 years96 years97 years98 years99 years
100 years
Borrower age
100% of Maximum Allowable LVR at Origination
Loan balanceSecurity value
1
Mean term of all fully repaid loans

2
Principal at origination + capitalised interest

Heartland Investor Day – 19 November 2018 | Page 38
Irish Stress Outcomes







•50% of Maximum Eligible LVR (12%) = No loss experienced:
-Conservative LVR on origination
-Severe decline in security value over 5 year period partially compensated for during following 5 years
-Long run HPI while modest partially offsets capitalising interest in a rising rate environment

•100 % of Maximum Eligible LVR (24%) = Loss experienced at 90 years of age, 21 years following loan origination
-Considered of low likelihood
-80% of repayments are voluntary and average loan term is 4.8
1
years
-Survival probability for a 69 year old to reach 90 is 29.8%
-At 100 years of age the loss/loan balance
2
is -36% (2% survival probability)

$0.0m
$0.2m
$0.4m
$0.6m
$0.8m
$1.0m
$1.2m
$1.4m
$1.6m
$1.8m
69 years70 years71 years72 years73 years74 years75 years76 years77 years78 years79 years80 years81 years82 years83 years84 years85 years86 years87 years88 years89 years90 years91 years92 years93 years94 years95 years96 years97 years98 years99 years
100 years
Borrower age
100% of Maximum Allowable LVR at Origination
Loan valueSecurity value
$0.0m
$0.2m
$0.4m
$0.6m
$0.8m
$1.0m
$1.2m
69 years70 years71 years72 years73 years74 years75 years76 years77 years78 years79 years80 years81 years82 years83 years84 years85 years86 years87 years88 years89 years90 years91 years92 years93 years94 years95 years96 years97 years98 years99 years
100 years
Borrower age
50% of Maximum Allowable LVR at Origination
Loan valueSecurity value
1
Mean term of all fully repaid loans

2
Principal at origination + capitalised interest

Heartland Investor Day – 19 November 2018 | Page 39
AAA Stress Outcomes
•The AAA Stress is the most severe as it compounds all risk factors:
-A 35% fall in security value is 2.1x more severe than anything experienced in the USA during the GFC
-The scenario assumes no HPI recovery, which is not supported by historical analysis
-Interest rates increases are steep, divergent to historical correlation in a housing downturn

•50% of Maximum Eligible LVR (12%) = Loss experienced at 92 year of age, 23 years following loan origination

•100 % of Maximum Eligible LVR (24%) = Loss experienced at 82 years of age, 13 years following loan origination


$0.0m
$0.2m
$0.4m
$0.6m
$0.8m
$1.0m
$1.2m
$1.4m
69 years70 years71 years72 years73 years74 years75 years76 years77 years78 years79 years80 years81 years82 years83 years84 years85 years86 years87 years88 years89 years90 years91 years92 years93 years94 years95 years96 years97 years98 years99 years
100 years
Borrower age
50% of Maximum Allowable LVR at Origination
Loan balanceSecurity value
$0.0m
$0.2m
$0.4m
$0.6m
$0.8m
$1.0m
$1.2m
$1.4m
69 years70 years71 years72 years73 years74 years75 years76 years77 years78 years79 years80 years81 years82 years83 years84 years85 years86 years87 years88 years89 years90 years91 years92 years93 years94 years95 years96 years97 years98 years99 years
100 years
Borrower age
100% of Maximum Allowable LVR at Origination
Loan balanceSecurity value

Heartland Investor Day – 19 November 2018 | Page 40
Financial & Regulatory update
David Mackrell, CFO

Heartland Investor Day – 19 November 2018 | Page 41
Corporate restructure and ASX listing
complete
•Heartland Group Holdings Limited listed on
the NZX Main Board and the ASX under a
foreign exempt listing under the ticker
code HGH.
•Provide the group with a more suitable
platform for future growth.
•Removes constraints on growth previously
arising from RBNZ regulations
•Provide greater flexibility to explore and
take advantage of future growth
opportunities in New Zealand and
Australia outside the banking group.
Heartland Australia Holdings
Limited
Heartland Bank Limited
Other current New Zealand
subsidiaries

Shareholders

Other current Australian
subsidiaries
Heartland Group Holdings
Limited


Banking group Non-banking group
NZX Listed
ASX Listed

Heartland Investor Day – 19 November 2018 | Page 42
Funding
•CBA has been the primary funder of the business since
its inception in 2004
•Committed warehouse facility to 30 September 2022
Present Funding
Current initiatives
•Continue to develop multiple warehouse facilities,
broadening providers of senior funding and introducing
mezzanine investors
•Potential rated Reverse Mortgage Backed Note
programme
•Potential A$ Medium Term Note programme (senior
unsecured) utilising Heartland Australia Group’s BBB-
rating (Fitch)

Heartland Investor Day – 19 November 2018 | Page 43
Capital
•Tier 2 Notes (A$20 million) were
repaid as part of the corporate
restructure in October 2018 with
existing funds.
•Total Capital Ratio forecast to
remain above 12.5% based on
forecast asset growth and earnings
while maintaining the proposed
level of dividend pay-outs.
•RBNZ due to conclude their capital
review in Second Quarter 2019.

| Page 44
Motor, Business, Rural
Chris Flood, Deputy CEO

Heartland Investor Day – 19 November 2018 | Page 45
Motor
•16% growth in net finance receivables in 2018 financial year
•13% annualised growth in the quarter ending 30 September
•11.4% CAGR between 2013 and 2018
•Scalable model due to distribution and origination/scorecard technology

Heartland Investor Day – 19 November 2018 | Page 46
Motor – growing dealership lending
•Dealership lending accounts for 94.1% of book as at 30 June 2018
- Average loan size of $24,000 compared to Direct average loan size of $19,000
•Broad distribution network of 400+ dealers and brokers.
- As at August 2018 there were 3,481 registered car dealers
•57% of new business volumes for FY2018 were originated from franchise dealers
- Higher quality borrowers, leading to lower impairments
•Key partnerships with Holden, Jaguar Land Rover and AA
- Introduce innovative products – GFV (Guaranteed Future Value)
•Keys to success:
- On-line origination at dealership – allows customer to secure funding at the point of sale
- Distribution network replaces the need for branches and therefore access to a wider pool of
customers

Heartland Investor Day – 19 November 2018 | Page 47
Motor – NZ market dynamics
•Heartland’s share of the market is small compared to vehicles sold. Therefore
this presents further growth opportunities
•There are over 1 million vehicles sold per year (dealer to public and private)
•Dealer to public sales accounted for 375,670 sales in FY18, up 1.9% on FY17
•Heartland originated 27,461 vehicle loans in FY18, up 14.7% on FY17, accounting
for 7.3% of total dealer to public sales

Heartland Investor Day – 19 November 2018 | Page 48
Business
Intermediary lending increasing
Relationship lending decreasing
Digital platform lending increasing

Heartland Investor Day – 19 November 2018 | Page 49
Business intermediary partnerships
•Growing business with intermediary partners –
financing trucks, vehicles, plant & machinery
•Heartland partners with distributors that
account for 33% of all new truck sales in New
Zealand
•Growth supported by digital financing platforms
for our key intermediary partnerships
•Other key partnerships – Mainfreight, Case IH,
Krone and Origin Agroup
•5,900 loans across 3,300 business intermediated
customers

Heartland Investor Day – 19 November 2018 | Page 50
Business
Average Loan Size
($’000)
30/06/2013 30/06/2014 30/06/2015 30/06/2016 30/06/2017 30/06/2018
Relationship
192.3 172.9 198.8 191.3 164.5 139.2
Intermediated
22.3 26.6 34.7 45.2 53.4 56.4
Open for Business
- - - 29.3 36.8 38.8
Total average loan size
96.7 93.2 110.6 111.1 97.2 84.1
Average Contractual Term
(months)
30/06/2013 30/06/2014 30/06/2015 30/06/2016 30/06/2017 30/06/2018
Relationship

79
90 84 74 78 73
Intermediated
44 45 47 49 51 51
Open for Business
- - - 59 57 52
Total average contractual term
74 83 78 69 70 65

Heartland Investor Day – 19 November 2018 | Page 51
Business – geographical diverse

Heartland Investor Day – 19 November 2018 | Page 52
Rural

Heartland Investor Day – 19 November 2018 | Page 53
Rural
Average Loan Size
($’000)
30/06/2013 30/06/2014 30/06/2015 30/06/2016 30/06/2017 30/06/2018
Rural – Relationship
308.0 311.3 370.8 393.3 422.5 427.3
Livestock - Direct
79.8 50.3 78.0 75.3 61.0 25.6
Livestock - Partnerships
225.9 167.1 77.8 66.4 64.6 55.3
Total average loan size
252.7 220.4 234.9 231.9 226.4 174.4
Average Contractual Term
(months)
30/06/2013 30/06/2014 30/06/2015 30/06/2016 30/06/2017 30/06/2018
Rural – Relationship
57 70 53 51 51 47
Livestock - Direct
21 53 72 1 16 10
Livestock - Partnerships
34 40 32 24 28 23
Total average contractual term
53 66 51 47 47 43

Heartland Investor Day – 19 November 2018 | Page 54
Rural
•Seasonal nature of rural and livestock mean we see higher gross
receivables balances in between reporting dates.
•Therefore rural income can increase even though reported receivables
fluctuate up and down.

Heartland Investor Day – 19 November 2018 | Page 55
Rural
Geographical exposure:
•48% rural exposure in Canterbury
and Otago
•Diverse spread around the rest of
New Zealand

Heartland Investor Day – 19 November 2018 | Page 56
Heartland Group
Digital Initiatives
2018

Heartland Investor Day – 19 November 2018 | Page 57
Our Approach to Digital
Distribution
and reach
Speed and
simplicity
Device
agnostic
OUR
DIGITAL
STRATEGY
Frictionless
user
experience
Data and
insights
Customer
centric
thinking
Device
agnostic
Customer
centric
thinking

Heartland Investor Day – 19 November 2018 | Page 58
Digital Overview
•Innovate, create and optimise
digital platforms
•Leverage customer feedback, data
and insights
•In-house capability enabling an
agile, responsive approach
•Diverse team skill-set and thinking
Average Monthly Website Visits
As at 14 November 2018
60,000+

Heartland Investor Day – 19 November 2018 | Page 59
Open for Business (O4B)
Credit Intelligence:
•Algorithms provide indicators as to an
applicant’s risk profile based on: statistical
analysis; market analysis; credit bureau
data; and industry-specific business rules
•Get to a decision faster
•Reporting and credit modelling drives
adjustments: ‘Learn and fix fast’

Key Information:
•Loans for small and medium sized business
in New Zealand – up to $75k unsecured
and up to $250k partially secured
•Fully online, three minute decisioning
•Platform launched in 2016 – continual
optimisation of the customer experience
•Two key channels used to reach customers:
1.directly through our website; and
2.through our referrer networks –
1300+ referrers and growing
Open for Business is New Zealand's
largest dedicated online small
business loan platform
Platform Booksize
growth over
last 18 months
CAGR over last
18 months
Compound
Monthly
Growth over
last 18 months
Open for
Business
$69.5m 92.97% 5.63%

Heartland Investor Day – 19 November 2018 | Page 60
Key Statistics on O4B


12.1%
Yield on new
origination
(b)

$111m
Loan book
(a)

Book Growth Since Origination
~$50K
Average loan
size
Recent typical month
$62
Average SEM
cost per new
customer
(a) For September 2018. Yield includes interest and fee income
(b) As at 31 October
SEM – Search Engine Marketing

Heartland Investor Day – 19 November 2018 | Page 61
What we have achieved
Search Engine Optimisation – Organic position on Google
Sep-17 Sep-18

Search Terms +
Rankings
AVG MONTHLY
SEARCHES
POSITION
AVG MONTHLY
SEARCHES
POSITION
POSITION
CHANGE
Business loans
720 14 880 4 10
Business loans NZ
590 12 720 5 7
Small business loans
260 7 260 3 4
Business lending
30 12 40 4 8
Asset finance
590 >100 590 7 100
Unsecured business
loans
40 4 260 2 2

Heartland Investor Day – 19 November 2018 | Page 62
Revolving credit facility
•Meets seasonal cash flow
requirements of better customers
•Available through Open For Business
and Mobile App
Term loan product
•Fixed term, amortising P&I product
•Used for plant and equipment,
business and franchise purchases,
vehicle purchases, or funding for
longer term growth

Heartland Investor Day – 19 November 2018 | Page 63
O4B – Marketing Campaign
•New TV commercial and supporting digital
activity launched mid-September 2018
•Key campaign objectives:
—Drive awareness of Heartland and the Open
for Business platform as an option for small
business finance
—Drive lead generation for Open for Business
•Campaign results to date:
—181% uplift in website traffic
—74% uplift in online applications received
•Continuing to optimise digital activity and
increase social media activity to targeted
audiences

Heartland Investor Day – 19 November 2018 | Page 64

Heartland Investor Day – 19 November 2018 | Page 65
Customer Interaction Analysis
•Heat maps show us how
visitors are interacting with
our website

•Website development
improvements based on
customer interaction analysis
are constant

Heartland Investor Day – 19 November 2018 | Page 66
Deposits Platform - What we have achieved
Platform Booksize
growth over
last 18 months
CAGR over last
18 months
Compound
Monthly
Growth over
last 18 months
Deposits
$104.6mill 139.78% 7.56%
Recent typical month
$25
Average SEM
cost per online
application

Heartland Investor Day – 19 November 2018 | Page 67
Heartland Mobile App – Key Features

Heartland Investor Day – 19 November 2018 | Page 68
Heartland Mobile App
Installs for Apple
As at 11 November 2018
1,488
Installs for Android
As at 11 November 2018
1,320
•2,800+ registered users across Apple and
Android
•8% uptake from deposit customers and
growing daily
•Extensive user testing drove over 100+
enhancements to the app prior to launch
•Overcomes customer issues previously
experienced with internet banking
•Internal app developers mean continuous
improvements in response to customer needs
•Increased engagement with Millennials and
Generations Z
4 months
to develop
3 months
of soft-
launch
3 months
since full
launch
“Great work with launching
the app – makes me more
likely to save more with HBL as
it is much easier to use!”

Heartland Investor Day – 19 November 2018 | Page 69
What we’re working on next
Solutions for
Millennials
and Gen Z
Mobile
Payments
Card
Payments
End-to-end
depositors
platform

Heartland Investor Day – 19 November 2018 | Page 70
Customer touch points
Pre-market
•Search engine
marketing
•Automated email
marketing
•Website
•CRM tool
management
Decision
making tools
•O4B application
is only 3 minutes
Validation
•Biometrics
•Robotic data entry
•Robotic Artificial
Intelligence
(Proof of Concept)
Documentation
•Online
documentation
•Digi-signature
Loan
Drawdown
•Automated
payments
Pre-market
•Search engine marketing
•Automated email marketing
•Website
•CRM tool management
Validation
•Biometrics
•Robotic data entry
•Robotic Artificial Intelligence
(Proof of Concept)
Customer Deposit
•Automated payments
Lending process automation initiatives
Deposits process automation initiatives

Lending and deposit roadmaps show key touch points in the
customer journey where automation initiatives are being
implemented.

Heartland Investor Day – 19 November 2018 | Page 71
RPA at Heartland
Implement in a process within
the business that:
•is rule based and
standardised
•has high repetition
•is transactional with high
transaction levels
•has high compliance
requirements
•has fluctuating demand
•is system based
•has highly structured digital
data
•follows a logical path with
low exception rate
Non-attended automation
Tasks that are automated end-to-end and can be
scheduled to run at regular intervals. E.g.:
•Retrieve information and serve up daily reports
•Complete regular reconciliation tasks
Attended automation
Tasks to assist a user carry out a process. E.g.:
•Complete a settlement quote while an agent is on the
phone with the client
•Finds errors for a user to update
Customer Service automation
Tasks that are simple but customers cannot self serve. E.g.
•Carry out an address change request received via
secure message

Heartland Investor Day – 19 November 2018 | Page 72
RPA at Heartland – next steps
Proven technology shows benefits of adopting more than a
single software solution
Blue Prism robotics software was first developed by the UK
banking industry and is well suited to Heartland.
Other recently developed offerings could provide different
benefits.
We are engaging with our current partner to deploy a single
licence in our production environment to start delivering
benefits immediately.
In parallel we will commence an RFI process to seek a
partner, or partners, to deliver to an overall strategy that
would be rolled out over 2 years.
The opportunity is not how we take the human out of the
workforce, but how we take the robot out of the human

Heartland Investor Day – 19 November 2018 | Page 73
Online Biometrics solution
Tailored workflows depending on customer needs
•A guided workflow (talking the customer through the
process)
•An unguided workflow (customer can complete in their
own time)
•Biometric Critical Success Factors:
•Collect an image of the identification electronically
with controls to detect any tampering
•Take a video of the customer, confirming that they
are a live person
•Match the ID to the video via facial recognition
•Confirm ID via Address and Date of Birth matching
•Available on any device (including mobile phone,
tablet and computer)
•Store and review the results

Heartland Investor Day – 19 November 2018 | Page 74
Heartland Investor Day
Closing remarks and Q&A