Heartland announces 1H2024 financial results

Heartland Group Holdings Limited | NZX/ASX: HGH | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info
NZX/ASX release
27 February 2024

Heartland announces 1H2024 financial results

Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) has announced its financial results
for the six-month period ended 31 December 2023 (1H2024).

‒ Net profit after tax (NPAT) of $37.6 million. Underlying
1
NPAT of $52.7 million. NPAT decreased
by $11.1 million (22.7%) and, on an underlying basis, decreased by $2.0 million (3.6%)
compared with the six-month period ended 31 December 2022 (1H2023).
2

‒ One-off or non-cash technical items had a $15.1 million net
3
impact on NPAT.
‒ Gross finance receivables (Receivables)
4
up 4.2%
5
.
‒ Continued strong growth in New Zealand Reverse Mortgages (up 18.7%)
5
and Australian
Reverse Mortgages (up 20.0%)
5
.
‒ Solid growth in Asset Finance (up 8.9%)
5
and Motor Finance (up 6.4%)
5
.
‒ Underlying impairment expense ratio decreased by 6 basis points (bps) to 0.23% compared with
1H2023.
6

‒ Significant progress towards Heartland’s ambitions to become a bank in Australia through the
acquisition of Challenger Bank Limited (Challenger Bank).
7

‒ Completion of Heartland Bank Limited’s (Heartland Bank) core banking system upgrade in
1H2024 enabling accelerated digitalisation and automation.

In December 2023, Heartland announced revised NPAT guidance for the financial year ending 30
June 2024 (FY2024) due to:
‒ the expected A$3.5 million one-off FY2024 impact on underlying NPAT arising from the
anticipated acquisition of Challenger Bank, positioning Heartland for its next stage of growth
‒ short-term operational performance challenges - a slower than expected start to FY2024 for
Motor Finance and Australian Livestock Finance, and higher cost of funds
‒ Heartland Bank’s response to issues affecting a subset of legacy lending.

1
Unaudited financial results are presented on a reported and underlying basis. Reported results are prepared
in accordance with NZ GAAP and include the impacts of positive and negative one-offs, which can make it
difficult to compare performance between periods. Underlying results (which are non-GAAP financial
information) exclude the impact of fair value changes on equity investments held, the de-designation of
derivatives, the Australian Bank Programme costs, increase in provisions for a subset of legacy lending, and any
other impacts of one-offs. NPAT excluding only the impact of fair value changes on equity investments held,
the de-designation of derivatives and the Australian Bank Programme costs was $41.2 million. This is intended
to allow for easier comparability between periods and is used internally by management for this purpose.
Refer to Profitability on page 5 for a summary of reported and underlying results. A detailed reconciliation
between reported and underlying financial information, including details about 1H2024 one-offs, is set out on
page 41 of the 1H2024 investor presentation (IP). General information about the use of non-GAAP financial
measures is set out on page 4 and 36 of the 1H2024 IP.
2
All comparative results are based on the unaudited half year consolidated financial statements of Heartland
and its subsidiaries (the Group) for 1H2023.
3
Includes tax impact on one-offs (as and where applicable).
4
Receivables includes Reverse Mortgages.
5
Annualised 1H2024 growth excluding the impact of changes in foreign currency exchange (FX) rates.
6
Underlying impairment expense ratio refers to the impairment expense ratio calculated using underlying
results. When calculated using reported results, the impairment expense ratio was 0.70%, up 41 bps compared
with 1H2023. For more information, see page 4 of the 1H2024 IP.
7
Subject to Reserve Bank of New Zealand (RBNZ) and Australian Prudential Regulation Authority (APRA)
approval.

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 2
In what has been a mixed environment in which to operate, Heartland’s 1H2024 result saw
continued growth in most of its core lending portfolios
8
, with good pipelines for further growth and
to expand market share.
The acquisition of Challenger Bank is nearing completion with the regulatory approval process now
in the final stages. When FY2024 guidance was provided, it excluded any costs related to the
acquisition of Challenger Bank. As the acquisition nears completion, it was appropriate that guidance
was updated to reflect the impact of Challenger Bank becoming part of Heartland. The impact to
underlying NPAT for FY2024 is expected to be a net loss of A$3.5 million, reflecting underlying NPAT
of Challenger Bank. This is expected to transition quickly to a profit-making position as material
deposit raising occurs.
In preparation for completion, Challenger Bank is actively raising deposits. Recent success achieved
by Challenger Bank in the Australian deposit market has exceeded Heartland’s expectations. This will
enable Heartland to optimise the advantage of a lower cost of funds post-acquisition completion.
Heartland is confident of acquisition completion in the second half of FY2024 (2H2024).
The arrears experienced in a subset of longer dated Motor Finance loans are a result of operational
issues in Heartland Bank’s Collections & Recoveries area and do not reflect any underlying issues
with the credit quality of the book. This is primarily a resourcing issue caused by illness, employee
turnover due to overseas travel, and a focus on Heartland Bank’s core banking system upgrade
(which is now complete). This is being addressed through a specialised recruitment strategy and
automation. Underlying impairments are otherwise performing as expected given the challenging
economic conditions. Heartland’s asset quality continues to shift towards loans with lower risk
exposures.

Overall performance continues to demonstrate the resilience of Heartland’s core lending portfolios
and ‘best or only’ strategy. In particular, Australian Reverse Mortgages’ market share increased to
41% as at 30 September 2023
9
and Motor Finance experienced growth of 6.4%
5
in a market where
total new and used car sales in New Zealand were down by 12.2%
10
. In the long-term Heartland
expects to continue its growth story. Organic growth is expected to improve in line with reduced
inflation. Similarly, cost of funds and net interest margin (NIM) are expected to improve as interest
rates ease.

One of Heartland’s focuses in 1H2024 has been on continuing to position for future growth.
Heartland has growth ambitions that will facilitate cost efficiency and return on equity (ROE)
expansion. Specifically, Heartland’s ambition is to achieve an underlying NPAT of $200 million and an
underlying cost-to-income (CTI) ratio of less than 35% by the financial year ending 30 June 2028
(FY2028).

Heartland has various strategic initiatives underway to support the realisation of its FY2028
ambitions, including:
‒ expansion in Australia facilitated by the acquisition of Challenger Bank providing access to
depositor funding and larger addressable markets
‒ increased digitalisation and automation to achieve frictionless service at a low cost
‒ continued growth across core lending portfolios.

8
Heartland’s core lending portfolios are Reverse Mortgages, Motor Finance, Asset Finance and Livestock
Finance.
9
Up from 36% at 30 September 2022. Based on APRA authorised deposit-taking institution (ADI) Property
Exposure and Heartland Finance data as at 30 September 2022 and 30 September 2023. This does not include
data from non-ADI providers of reverse mortgages.
10
Based on data from Turners, dated December 2023 (data sourced from Waka Kotahi NZ Transport Agency).

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 3
Key financial metrics


Reported Underlying
11

1H2024 1H2023 Movement 1H2024 1H2023 Movement
NOI
12
($m) 143.1 141.7 1.4 145.6 149.6 (4.1)
Operating expenses
(OPEX) ($m)
66.5 63.4 3.0 63.5 63.9 (0.4)
NPAT ($m) 37.6 48.7 (11.1) 52.7 54.7 (2.0)
NIM 3.67% 3.97% (29 bps) 3.67% 4.02% (34 bps)
CTI ratio 46.5% 44.8% 170 bps 43.7% 42.7% 93 bps
Impairment expense
ratio
0.70% 0.29% 41 bps 0.23% 0.29% (6 bps)
ROE 7.3% 10.6% (329 bps) 10.2% 12.1% (183 bps)
Earnings per share
(EPS)
5.3 cps 7.3 cps (2.0 cps) 7.4 cps 8.2 cps (0.8 cps)

Strategic vision
Heartland’s strategic vision is to create sustainable growth and differentiation by providing products
which are the ‘best or only’ of their kind, through scalable digital platforms. In December 2023,
Heartland Bank was proud to be recognised for its strategy in the Deloitte Top 200 Awards as a
finalist in the Best Growth Strategy category.

Heartland's strategy is underpinned by three pillars:
1. Frictionless Service at the Lowest Cost – reflected in a superior underlying CTI ratio
2. Expansion in Australia
3. Business as Usual Growth (reported on in Business performance from page 8).

Frictionless Service at the Lowest Cost – CTI ratio
Heartland measures efficiency through the CTI ratio. Through careful cost management, Heartland’s
costs were flat on 1H2023 and underlying OPEX decreased $0.4 million (0.6%). However, as a result
of NIM compression which is expected to be temporary (see page 6), Heartland’s underlying CTI
ratio increased by 93 bps on 1H2023 to 43.7%.
13
Heartland’s underlying CTI ratio remains
significantly lower than the average CTI ratio of New Zealand’s main domestic banks, and much
more comparable to the average CTI ratio of Australia’s major banks.
14
This demonstrates that
Heartland has achieved a similar operating leverage to the major Australian banks.

Heartland’s ambition is to achieve an underlying CTI ratio of less than 35% by FY2028 through
revenue growth, cost discipline, and ongoing automation and digitalisation initiatives. In doing so,
Heartland intends to provide customers with frictionless service and enable scalable growth.
Increasing customer self-service and improving process efficiencies are key to achieving this.

11
See footnote 1.
12
Net operating income (NOI) includes fair value gains/losses on investments.
13
Underlying CTI ratio refers to the CTI ratio calculated using underlying results. When calculated using
reported results, the CTI ratio was 46.5%, up 170 bps compared with 1H2023. See page 4 of the 1H2024 IP for
more information about the use of the CTI ratio, a supplementary, non-GAAP measure.
14
The average CTI ratio of New Zealand’s main domestic non-major banks excluding Heartland (The Co-
operative Bank, Kiwibank, SBS and TSB) was 70.7% for the 12 months to 30 September 2023 (data from the
RBNZ Financial Strength Dashboard, valid as at 27 November 2023). The average CTI ratio of Australia’s major
banks (ANZ, CBA, NAB and Westpac) was 45.2% for their most recent respective annual reporting periods.

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 4
The upgrade of Heartland Bank’s core banking system was completed in November 2023 and is an
important enabler of increased levels of automation and digitalisation. Enhanced core system
capability allows Heartland Bank to accelerate digital development and is expected to position
Heartland Bank for greater scalability in the future.

Motor Finance digital platform enhancements continued through 1H2024, with Heartland Bank
delivering four branded online origination platforms for dealer partners. This has progressed
Heartland well towards delivering its stated goal of seven dealer origination platforms by the end of
FY2024. Work on delivering a further four platforms is in progress. Through these online platforms,
customers can purchase a vehicle conveniently from any device by selecting their vehicle, applying
for finance, and receiving an approval in minutes.

Process automation continues, with a particular focus on Heartland Bank’s Collections & Recoveries
area. Resourcing issues caused by illness, employee turnover due to overseas travel and a focus on
Heartland Bank’s core banking system upgrade (which is now complete) in the Collections &
Recoveries area have resulted in collection efforts being constrained. These challenges are being
actively resolved, including through increased automation, and do not reflect any underlying credit
quality issues. Automation is expected to improve internal workflows and reduce manual effort,
thereby reducing friction for customers and employees. Activity underway includes upgrading the
debt management and collections system, integration with core banking systems, introducing
automation to workflows and some outbound calls, and making greater use of data and analytics to
drive collections strategies.

Expansion in Australia
Considerable effort has been made in 1H2024 towards progressing Heartland’s ambition to become
a bank in Australia through the acquisition of Challenger Bank. While the acquisition remains subject
to Reserve Bank of New Zealand (RBNZ) and Australian Prudential Regulation Authority (APRA)
approval, the approval process is now in the final stages and Heartland is confident of completion in
2H2024.

Challenger Bank has commenced raising deposits ahead of being acquired by Heartland Bank and
will continue to do so. This will enable Heartland to optimise the advantage of a lower cost of funds
post-acquisition completion. In the seven-week period commencing 8 January 2024, retail deposit
growth of $528 million was achieved, at a rate which is 1.34% lower than Heartland Australia’s
(comprising Heartland Australia Holdings Pty Ltd and its subsidiaries) current cost of funds.
15


Subject to completion, the acquisition would make Heartland the only specialist bank provider of
both reverse mortgages and livestock finance in Australia. The acquisition once completed is
expected to support ongoing growth and enable expansion into new product segments in which
Heartland Bank has specialist expertise, including in Motor Finance and Asset Finance. Heartland
intends to leverage its extensive operational experience in New Zealand to drive expansion into
Australia.

Heartland continued to be the leading Australian provider of reverse mortgages as its market share
increased to 41% as at 30 September 2023.
9
Demand continues to increase for Reverse Mortgages
on both sides of the Tasman, driven by continued cost-of-living pressures and a growing proportion
of people aged 65 and over in both populations. As new trans-Tasman research by RMIT University
suggests, ageing populations are expected to place significant strain on government and local
authority resources.
16
As a result, households may need to draw more on their own resources. The
Australian Treasury’s 2020 Retirement Income Review reported that for most households aged 65

15
Month to date January 2024 cost of funds for Heartland Australia (including StockCo Australia).
16
Ageing Well in Place: An Australian and New Zealand Perspective, RMIT University.

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 5
and over, the family home is their largest asset. For those wishing to remain in their home as they
age, a reverse mortgage can be a good solution to the financial barriers to ageing well in place.

Heartland’s Australian Livestock Finance business, StockCo, is positioned to benefit from strong
tailwinds in the Australian livestock sector. StockCo, is one of the largest specialist livestock finance
providers in Australia. Becoming a bank will provide Heartland with a lower cost of funds to enable
product enhancements which Heartland believes will provide a competitive advantage from which
to gain market share. StockCo continues to work with and support its clients as they overcome the
challenges of the last year, noting the recent livestock market price gains are expected to benefit
both clients and StockCo’s balance sheet.

Operating environment
Borrower demand and NIM are expected to improve as inflation eases and interest rates decline
(see page 6).

The New Zealand general election, held in October 2023, is believed to have caused some
uncertainty for many who delayed borrowing decisions until the new government and subsequent
policy changes were confirmed. In the motor market, pre-election announcements to repeal the
clean car discount scheme, and the consequent removal of internal combustion engine taxes on new
vehicles from 31 December 2023, is believed to have caused consumers to delay new vehicle buying
decisions until the 2024 calendar year. As expected, the end of January 2024 saw an increase in
vehicle purchase enquiries, with normal trading patterns anticipated by Heartland to return towards
the end of FY2024.

The adverse climatic conditions that affected Heartland’s Australian Livestock Finance portfolio in
1H2024 are dissipating. After recent rainfall across the eastern states of Australia, the chance of
drought is now reduced, and livestock prices are improving (see page 10).

The medium-term economic outlook is for improvement as higher interest rates drive down the rate
of inflation. In addition, the labour market is proving to be more resilient than expected. Typically,
however, credit outcomes tend to lag economic conditions, so similar credit outcomes are expected
through the remainder of FY2024, before an improvement in FY2025, as the expected impact of
more stable economic conditions and stronger consumer and business confidence is felt.

Financial results
Profitability
1H2024 reported results have been normalised to exclude one-off or non-cash technical items,
including the following.
17

1. Legacy hedge accounting impacts: a $4.3 million loss contributed by the derivatives that were
de-designated from their prior hedge accounting relationships in the financial year ended 30
June 2022 (FY2022). The de-designation resulted in a pre-tax $16.7 million mark-to-market
(MTM) accounting gain on these derivatives being recognised in FY2022. This MTM gain is
subsequently unwound as a loss as the cashflows from these derivatives are realised, including
a pre-tax $9.1 million loss recognised in the financial year ended 30 June 2023 (FY2023) and
pre-tax $4.3 million in 1H2024.

17
Refer to page 41 of the 1H2024 IP for an exhaustive list of 1H2024 one-offs and a detailed reconciliation
between reported and underlying financial information.

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 6
2. Fair value gain on equity investment in Harmoney Corp Limited (Harmoney): a $1.9 million fair
value gain was recognised on investment in Harmoney shares during 1H2024. The fair value as
at 29 December 2023 was determined based on the closing last traded price of Harmoney
shares on the Australian Stock Exchange of A$0.49 per share.
3. Australia Bank Programme costs: $2.3 million of transaction and other costs in relation to
acquiring an ADI in Australia. In addition, $3.3 million of costs directly attributable to applying to
become an ADI have been capitalised as an intangible asset in 1H2024.
4. Increase in provisions for a subset of legacy lending: a pre-tax $16.0 million increase in
provisions to respond to issues affecting a subset of legacy lending (see page 7).

The impact of one-off items on the respective financial metrics is outlined in the table on page 3.
NOI
Total NOI was $143.1 million, an increase of $1.4 million (1.0%) from 1H2023.
Underlying NOI was $145.6 million, $4.1 million (2.7%) lower than in 1H2023. This was largely due to
a $2.0 million (1.4%) decrease in net interest income, driven by a 34 bps decrease in underlying NIM
compared with 1H2023 offset by $562.7 million (8.1%) higher average interest earning assets in
1H2024 than in 1H2023.

Underlying other operating income decreased by $2.0 million (23.1%) from 1H2023.

NIM
NIM
18
has been impacted by the following factors.

‒ Heightened competition in the New Zealand deposit market in 1H2024 as banks refinanced
their drawings under the RBNZ Funding for Lending Programme
19
, impacting Heartland Bank’s
cost of funds, thereby also contributing to NIM compression. Heartland Bank expects this to
continue through the 2024 calendar year as RBNZ Funding for Lending Programme participants
replace this funding with deposit funding.
‒ Increased growth in Reverse Mortgages.
‒ Heartland continuing to shift its portfolio composition towards lower risk exposures while
higher margin legacy business lending and other forms of non-core and unsecured lending
portfolios run off, noting that lower margin Asset Finance loans are taking longer to roll off as
customers take longer to refinance assets.

In addition, Heartland intentionally delayed passing the full impact of successive interest rate
increases onto New Zealand Reverse Mortgages and Australian Livestock Finance customers. While
this did not maximise potential NIM, it was considered the socially responsible and more sustainable
approach.

Careful pricing and margin management is in place to balance NIM and growth. Heartland expects
NIM improvement in the 2025 calendar year as the deposit market eases and older Asset Finance
and Motor Finance loans at lower rates continue to be repaid.

OPEX
OPEX was $66.5 million, an increase of $3.0 million (4.8%) on 1H2023. Underlying OPEX
17
decreased
$0.4 million (0.6%).

18
In the six months to 31 December 2023, underlying NIM contracted 33 bps from 30 June 2023.
19
One of the monetary policy tools used by the RBNZ during the COVID-19 pandemic, which allowed eligible
banks to borrow directly from the RBNZ at the official cash rate, to lower the funding costs for eligible banks.

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 7
CTI ratio
The underlying CTI ratio increased by 93 bps on 1H2023 to 43.7%.
20
While costs in 1H2024 were
controlled, the CTI ratio was impacted by a decrease in NOI, largely due to NIM compression which
Heartland expects to be temporary, with NIM improvement expected in the 2025 calendar year.
Impairment expense
Overall, underlying impairments continue to perform within expectations. Impairment expense was
$24.0 million, $14.8 million (160.1%) up on 1H2023. On an underlying basis, impairment expense
was $1.2 million (13.0%) down on 1H2023, reflecting the overall improvement in asset quality.
Underlying impairment expense ratio decreased to 0.23% in 1H2024, down 6 bps compared with
1H2023.
21


As advised in December 2023, Heartland Bank’s $16.0 million (pre-tax) increase in provisions was
taken to respond to issues affecting a subset of legacy lending as outlined below. While Heartland
considered the increase in provisions was required out of prudence, it may not be utilised in full.

1. Legacy Business and Relationship lending: a $5.5 million increase in provisions held against this
portfolio. This includes a $4.5 million increase in specific provisions against legacy loans in
segments of the market to which Heartland Bank no longer lends where economic conditions
have decreased confidence in collectability, and a $1.0 million collective provision.
2. Longer dated Motor Finance loans: a $10.5 million increase in collective provisions. This was
reduced by $2.3 million to reflect write-offs experienced in 1H2024 against this cohort.

ROE
Underlying ROE was 10.2%, down 183 bps compared with 1H2023.
22
This is as a result of carrying
more capital on average following the capital raise conducted in 1H2023.

Financial position
Total assets increased by $167.1 million (2.2%) during 1H2024, driven by a $143.7 million (4.2%)
23

increase in Receivables and a $51.5 million (8.2%) increase in liquid assets.

Borrowings
24
increased by $211.1 million (3.2%). Deposits increased by $82.7 million (2.0%), along
with an increase in other borrowings of $128.4 million (5.1%) during 1H2024.

Net assets decreased by $9.7 million to $1,021.3 million. Net tangible assets (NTA) decreased by
$24.0 million to $750.2 million, resulting in an NTA per share of $1.05 (30 June 2023: $1.09).


20
Underlying CTI ratio refers to the CTI ratio calculated using underlying results. When calculated using
reported results, the CTI ratio was 46.5%, up 170 bps compared with 1H2023. See page 4 of the 1H2024 IP for
more information about the use of the CTI ratio, a supplementary, non-GAAP measure.
21
Underlying impairment expense ratio refers to the impairment expense ratio calculated using underlying
results. When calculated using reported results, the impairment expense ratio was 0.70%, up 41 bps compared
with 1H2023. For more information, see page 4 of the 1H2024 IP.
22
Underlying ROE refers to ROE calculated using underlying results. When calculated using reported results,
ROE was 7.3%, down 329 bps compared with 1H2023. For more information, see page 4 of the 1H2024 IP.
23
Annualised 1H2024 growth excluding the impact of changes in FX rates.
24
Includes retail deposits and other borrowings.

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 8
Business performance

New Zealand
New Zealand Reverse Mortgages
New Zealand Reverse Mortgages NOI was $23.8 million, an increase of $3.3 million (16.3%)
compared with 1H2023. Receivables increased $83.9 million (18.7%)
25
to $972.5 million.

Older New Zealanders and Australians continue to feel the impact of cost-of-living pressures in
retirement.
25
This has been reflected in the demand for and use of Reverse Mortgages. Average
initial loan value has been steadily decreasing, from $90,287 at 31 December 2022 to $77,125 at 31
December 2023, as customers become more conservative with the amount being borrowed upfront.
Demand for Heartland Bank’s ‘Easy Living Monthly Advance’ option also increased, up 29% in
December 2023 compared with the average monthly figure across FY2023.

At the start of FY2024, Heartland Bank made improvements to its online application form and
processes, driving a higher volume of online applications and resulting in better customer outcomes
– including a more efficient application experience. Accelerated growth is expected in 2H2024 as the
benefits of these improvements continue to be realised, and as a result of demand from cashflow
pressures being felt by older homeowners.

Motor Finance
Motor Finance NOI was $31.6 million, a decrease of $1.1 million (3.3%) compared with 1H2023.
Motor Finance Receivables increased $50.6 million (6.4%)
20
to $1.6 billion.

Motor Finance experienced a slower than expected start to FY2024 as described on page 5 in a
market where total new and used car sales in New Zealand were down by 12.2% in 1H2024
26
.
Relative to the market, Heartland Bank’s growth of 6.4%
25
was very pleasing.

Motor Finance NIM continues to be impacted by a shift in asset quality, competitive pressures, and
as customers hold on to their vehicle loans for longer periods of time.

Heartland Bank continued to strengthen its distribution network of dealers and partnerships. In
1H2024, Heartland Bank renewed its partnerships with Jaguar Land Rover New Zealand and Auto
Distributors (for Peugeot, Citroen and Opel) and announced a new partnership with MG Motor in
New Zealand to launch MG Finance. Heartland Bank is now also one of Tesla’s two preferred finance
providers.
27


Online Home Loans
28

Online Home Loans NOI was $1.2 million, a decrease of $0.9 million (43.5%) compared with 1H2023.
Online Home Loans Receivables increased $9.0 million (5.7%)
25
to $322.3 million.

While the rate of growth slowed, Receivables growth of 5.7%
25
remained well above the overall New
Zealand market expansion in home lending over the period, which stood at 1.7%.
29
Heartland Bank
has strong retention of existing customers – exceeding 90% for those customers whose fixed rates
came up for review during 1H2024.

25
Ageing Well in Place: An Australian and New Zealand Perspective, RMIT University.
26
Based on data from Turners, dated December 2023 (data sourced from Waka Kotahi NZ Transport Agency).
27
Tesla preferred finance provider launched in February 2024.
28
Excludes legacy Retail Mortgages.
29
Based on RBNZ’s Registered banks and non-bank lending institutions: Sector lending (C5) data at 31
December 2023 compared with 30 June 2023. Data accurate as at 31 January 2024.

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 9
Personal Lending
Personal Lending includes loans originated directly through Heartland Bank, and legacy portfolios
originated by Harmoney in New Zealand and Australia. To manage risk in the current environment,
this portfolio is not actively originating. Heartland’s Harmoney personal loans channel is closed to
new business and in run off.

Personal Lending NOI was $2.1 million, a decrease of $1.4 million (39.5%) compared with 1H2023.
Personal Lending Receivables decreased by $13.0 million (54.9%)
25
to $34.1 million. Harmoney
Receivables decreased by $4.5 million (86.2%)
25
, made up of a decrease in the New Zealand
Harmoney channel of $2.3 million (81.9%)
25
to $3.2 million, and a decrease in the Australian
Harmoney channel of $2.3 million (90.9%)
25
to $2.7 million. Heartland originated personal lending
decreased by $8.5 million (46.0%)
25
to $28.2 million in 1H2024.
Asset Finance
Asset Finance NOI was $14.3 million, a decrease of $0.6 million (4.1%) compared with 1H2023,
largely as a result of lower margin loans taking longer to roll off as customers take longer to
refinance assets. Refinance deferral by customers has also impacted growth, with Asset Finance
Receivables increasing $30.6 million (8.9%)
25
to $713.3 million. However, against this backdrop,
growth of 8.9% is strong.

Heartland Bank entered 2H2024 with a solid pipeline for further growth. Heartland Bank’s focus
remains on the freight transport and yellow goods sectors. Exposure to the forestry sectors
continues to run down.

Business
Overall Business NOI was $14.1 million, a decrease of $1.6 million (10.4%) compared with 1H2023.
Business Receivables decreased $39.1 million (13.5%)
25
to $534.5 million. This is made up of
Wholesale Lending and Business Relationship.
Wholesale Lending includes floorplan lending to vehicle retailers and wholesale facilities to other
lenders, including for medium enterprises that on-lend to their own customers in the consumer
motor and business sectors. Wholesale Lending Receivables decreased $20.1 million (16.3%)
25
to
$225.0 million, reflecting lower utilisation of floorplan lending limits as existing customers reduced
stock levels to match consumer demand. Growth from new business is anticipated in 2H2024 as
Heartland Bank continues to expand its Motor Finance dealer network, presenting Wholesale
Lending opportunities with dealerships.
Business Relationship Receivables decreased $19.0 million (11.5%)
25
to $309.5 million, as this
portfolio continues to transition from legacy loans to lower risk loans that are more cost efficient to
transact.
Open for Business (O4B)
O4B NOI was $5.5 million, a decrease of $1.2 million (18.2%) compared with 1H2023. O4B
Receivables decreased $18.2 million (30.9%)
25
to $98.9 million.

Rural
Overall Rural lending NOI was $16.8 million, a decrease of $0.2 million (1.2%) compared with
1H2023. Overall Rural portfolio Receivables decreased by $36.4 million (10.3%)
25
to $664.1 million.
This is made up of Livestock Finance, Rural Relationship and Rural Direct.
The decrease in overall Rural portfolio Receivables was primarily driven by the normal seasonal
fluctuations in Heartland’s Livestock Finance Receivables which decreased by $31.9 million (33.1%)
25

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 10
to $159.3 million. The portfolio performance was better than expected, in a market where overall
livestock prices were down year-on-year. The outlook for 2H2024 is positive as Heartland Bank
maintains its growth momentum with existing and new intermediaries.

Rural Relationship Receivables decreased by $8.2 million (3.8%)
25
to $416.2 million, reflecting
Heartland Bank’s continued transition away from large, complex, low margin lending.

Rural Direct includes Heartland’s Sheep & Beef Direct and Dairy Direct digital platforms which
provide online finance to well-geared and resilient sheep, beef and dairy farmers. Rural Direct
Receivables increased by $3.7 million (8.6%)
25
to $88.6 million. Weak livestock price conditions and
higher costs reduced confidence in the market and led to fewer farm sales, resulting in subdued
growth of the portfolio.

Australia
Australian Reverse Mortgages
Australian Reverse Mortgages NOI was $26.2 million, an increase of $3.1 million (13.4%) compared
with 1H2023. Australian Reverse Mortgages Receivables increased by $152.9 million (20.0%)
25
to
$1.7 billion.

As in New Zealand, cost-of-living pressures are contributing to growth in Australian Reverse
Mortgages and the way in which customers are using their Reverse Mortgages.
30
Cost-of-living
requests (debt consolidation, supplementing income) have increased while lifestyle requests (car,
travel) have softened. Home improvements and debt consolidation remain the top two loan
purposes.

Growth is expected to remain strong in 2H2024 as older Australians seek to remain in their home as
they age.

Australian Livestock Finance
Australian Livestock Finance NOI was $8.2 million, a decrease of $3.3 million (28.6%) compared with
1H2023. Receivables decreased $76.4 million (40.4%)
25
to $298.6 million.

Adverse weather conditions and drought concerns continued to negatively impact livestock prices in
1H2024. Many producers either consolidated debt with banks or destocked ahead of the drought
and, in doing so, sold livestock at low prices. While other farmers with sufficient feed retained
livestock for longer periods to gain weight and recoup value. This resulted in growth challenges and
compressed Australian Livestock Finance NIM.

January and February are traditionally low trading months, however the market remains cautious
yet optimistic ahead of autumn restocking, the reducing risk of drought and the recent
improvements in lamb and cattle prices. Cattle prices are now above the 10- and 20-year averages.
While Trade Lamb prices have nearly doubled over recent weeks and now sit above the 20-year
average and slightly below the 10-year average.
31
Heartland expects a stronger performance from
Australian Livestock Finance in 2H2024, with growth on a value basis.

Funding and liquidity

Heartland increased borrowings by $211.1 million (3.2%) to $6,838.5 million.


30
Ageing Well in Place: An Australian and New Zealand Perspective, RMIT University.
31
Data from the National Livestock Reporting Service.

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 11
New Zealand
Heartland Bank increased borrowings by $217.3 million (4.6%) to $4,963.5 million.

Total deposits grew $82.7 million (2.0%) during 1H2024 to $4,213.8 million, which was driven by
competitive pricing on targeted products, including Heartland Bank’s Digital Saver offering which
launched in October 2023.

Term deposits increased by $187.5 million (7.1%) during 1H2024, while call deposits and savings
deposits decreased by $104.8 million (7.0%). The savings to total deposit ratio decreased from 17%
to 15%, while call to total deposit ratio remained consistent during 1H2024.
Heightened competition is being experienced in the deposit market and is expected to continue
through the 2024 calendar year as banks refinance their drawings under the RBNZ Funding for
Lending Programme. Despite market competition resulting in a higher cost of funds, Heartland
Bank’s cost of funds has outperformed its key peer challenger banks

in the first quarter of FY2024.
32

Other borrowings increased by $134.6 million (21.9%) during 1H2024, largely due to an increase in
the amount drawn down in Heartland Bank’s committed auto warehouse facility by $149.5 million.
This was partially offset by the decreased amount of Heartland Bank’s issuance of short-term
Commercial Paper.

A $100 million limit increase to Heartland Bank’s committed auto warehouse facility was executed in
September 2023 taking the total limit outstanding to $500 million.

With a regulatory capital ratio at 14.07%
33
, Heartland Bank continues to operate significantly in
excess of regulatory minimums and is well positioned to meet the RBNZ’s future higher capital
requirements. These requirements are for a core capital ratio of 11.50% and a total capital ratio of
16.00% by 1 July 2028.

Australia
Heartland Australia increased borrowings by A$4.2 million (0.2%) to A$1,736.7 million. Excluding
StockCo Australia (comprising StockCo Australia Management Pty Ltd, StockCo Holdings 2 Pty Ltd
and their subsidiaries), which was transferred from Heartland to Heartland Australia on 1 August
2023, borrowings increased by A$74.9 million (5.1%) from 1H2023 to A$1,557.1 million.

An A$50 million tap issue was completed in October 2023 and a further A$105 million tap Medium
Term Note (MTN) was issued in December 2023. The proceeds were used to refinance another
maturing facility and provide further Reverse Mortgage funding. The aggregate outstanding issuance
under Heartland Australia’s MTN programme was A$395 million as at 31 December 2023 (30 June
2023: A$240 million).

The aggregate senior limits of the two Reverse Mortgage securitisation warehouses were expanded
by A$200 million during the period, providing Heartland Australia with access to A$1.77 billion of
committed funding in aggregate.

StockCo Australia decreased borrowings by A$70.6 million (28.2%) to A$179.6 million
34
, reflecting
the current book size.

32
Based on dashboard data from the RBNZ for the period July 2023 to September 2023.
33
Heartland Bank’s regulatory capital ratio decreased slightly to 14.07% as at 31 December 2023 (30 June
2023: 14.71%) driven by balance sheet growth and the FY2023 dividend payment.
34
Excluding intercompany funding from Heartland Australia.

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 12
Heartland Australia has also made significant progress on negotiations with senior lenders to make
existing securitisation facilities compliant with the Australian Prudential Standards for ADIs in
anticipation of operating in Australia as a licenced bank.

Regulatory update

On 31 January 2024, New Zealand’s Minister of Commerce and Consumer Affairs announced plans to
review the:
‒ Credit Contracts and Consumer Finance Act 2003 to ensure it works effectively to protect
vulnerable consumers without unnecessarily limiting access to credit. Consultation is expected
over the coming months, including on removing prescriptive affordability requirements for
lower-risk lending and reviewing the penalty and disclosure regimes.
‒ Financial Markets (Conduct of Financial Institutions) Amendment Act 2022 given concerns that
it could result in disproportionate compliance costs.
Heartland Bank will monitor for further developments regarding any proposed changes.

The Commerce Commission is due to publish its preliminary findings from the market study into any
factors that may affect competition for the supply or acquisition of personal banking services around
March 2024, with the final report due by 20 August 2024.

The new depositor compensation scheme under the Deposit Takers Act 2023 is now expected to
commence from mid-2025.

In Australia, Heartland is monitoring changes to Australian regulatory requirements for its existing
businesses and is preparing for the acquisition of Challenger Bank, which is an APRA regulated ADI
(including compliance with the Financial Accountability Regime).

Sustainability update

Heartland is preparing to meet the new Climate-Related Disclosures obligations introduced through
the Financial Sector (Climate-Related Disclosures and Other Matters) Amendment Act 2021.
Heartland’s first climate statement is required as part of its full year reporting for FY2024.
Heartland’s sustainability strategy is built on three pillars: environment, people and financial
wellbeing. Significant achievements in 1H2024 are outlined below.

‒ Heartland’s Board established a Sustainability Committee to oversee Heartland’s sustainability
strategy and implementation plans.
‒ As part of funding Heartland’s borrowers’ transition to a net-zero economy, Australian Livestock
Finance business, StockCo, announced a two-year pilot project with farmer-led software
provider Ruminati. The software helps producers track and validate on-farm climate action
across the supply chain. The partnership will allow StockCo to view its clients’ on-farm
emissions, and understand the client’s strategy for farm management, climate risk mitigation
and emission reduction strategies.
‒ Heartland Bank’s Manawa Ako internship programme welcomed 30 Māori and Pasifika
rangatahi (youth). The FY2024 programme received 80 applications – the greatest number of
applications received since the programme was established in 2017.
‒ Heartland Bank was awarded Canstar New Zealand’s Bank of the Year – Savings for the sixth
year in a row, with five-star ratings awarded for its Direct Call Account (for the eighth year in a

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 13
row), 32-day Notice Saver Account (for the second year in a row), and 90-day Notice Saver
Account.
‒ Australian Reverse Mortgage business, Heartland Finance, was awarded a Non-Bank of the Year
Excellence Award at the Australian Mortgage Awards 2023 for the fourth year in a row.

Removal from FTSE Global Equity Index Series Small Cap Index

Heartland will be removed from the FTSE Global Equity Index Series Small Cap Index (Index) after
close of business on Friday, 15 March 2024 (UK time), following the semi-annual review of the Index.
Heartland wishes to ensure that all shareholders have this information, following some recent
speculation in the market.

Heartland is being removed from the Index as it no longer meets the Index’s liquidity requirement
for existing constituent issuers to pass a monthly median turnover test based on their free float
shares on issue. Heartland’s best estimate is it is likely that less than 3% of its shares must be sold as
a result of its removal from the Index.

The Index includes over 18,000 large, mid, small and micro-cap securities across 48 developed and
emerging markets globally, with a wide range of modular indices available to target specific markets
and market segments.

Interim dividend

Heartland is pleased to declare a 1H2024 interim dividend of 4.0 cps, down 1.5 cps on 1H2023.
Heartland’s interim dividend yield of 11.9%
35
compares with 8.7%
36
in 1H2023.

A slightly lower interim dividend is consistent with current earnings and previous payout ratios and
does not reflect a change in policy.

The interim dividend will be paid on Wednesday 20 March 2024 (Payment Date) to shareholders on
the company’s register as at 5.00pm NZST on Wednesday 6 March 2024 (Record Date) and will be
fully imputed.

Heartland has a Dividend Reinvestment Plan (DRP), giving eligible shareholders the opportunity to
reinvest some or all of their dividend payments into new ordinary shares. The DRP will apply to the
interim dividend with a 2.0% discount.
37
The DRP offer document and participation form is available
on Heartland’s website at heartlandgroup.info/investor-information/dividends.

Looking forward
Heartland’s vision is to create sustainable growth and a superior underlying CTI ratio, providing
digital banking products which are the best or only of their kind to markets it considers are
underserved in New Zealand and Australia. By FY2028, its ambition is to achieve an underlying NPAT
of $200 million and underlying CTI ratio of less than 35%. Heartland has various strategic initiatives

35
Total fully imputed dividends for 1H2024 (interim) and 2H2023 (final) divided by the closing share price as at
26 February 2024 of $1.17.
36
Total fully imputed dividends for 1H2023 (interim) and 2H2022 (final) divided by the closing share price as at
24 February 2023 of $1.75.
37
That is, the strike price under the DRP will be 98.0% of the volume weighted average sale price of Heartland
shares over the five trading days following the Record Date. For the full details of the DRP and the Strike Price
calculation, refer to the Heartland DRP offer document dated 10 December 2018.

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 14
underway to support the realisation of its future growth ambitions.

Completing the Challenger Bank acquisition is the focal point for 2H2024 and a critical step in
Heartland’s strategy for expansion in the Australian market – and ultimately towards achieving its
FY2028 ambitions. Recent success achieved by Challenger Bank in the Australian deposit market has
exceeded Heartland’s expectations and will enable Heartland to optimise the advantage of a lower
cost of funds post-acquisition completion. The regulatory approval process for the Challenger Bank
acquisition is nearing completion and Heartland is confident of completion in 2H2024.

In the long-term Heartland expects to continue its growth story. Organic growth is expected to
improve in line with reduced inflation. Similarly cost of funds and NIM are expected to improve as
interest rates ease.

While 2H2024 is expected to be challenging, Heartland is confident in the resilience of its core
lending portfolios and ‘best or only’ strategy and anticipates accelerated organic growth in line with
reduced inflation.

In particular, New Zealand and Australian Reverse Mortgages are expected to continue to perform
well as Heartland meets the financial needs of ageing populations in both countries. Although
competition has increased in Australia, this brings with it greater opportunities for increased
awareness and acceptance of reverse mortgages as a solution to living a more comfortable
retirement. Heartland’s partnership with RMIT University continues through 2H2024 as it seeks to
gain a more in-depth understanding of the factors which can impact an individual’s ability to age well
in place.

Core lending portfolio growth will be supported by accelerated digitalisation and automation,
enabled by the completion of Heartland Bank’s core banking system upgrade. Process automation
and the development of more customer self-service functionality will contribute to enhanced
efficiency and the removal of friction for employees and customers. Increased digitalisation,
alongside ongoing cost discipline and revenue growth, underpins Heartland’s ability to achieve a
superior underlying CTI ratio and achieve scalable growth. This is what sets Heartland apart.

Heartland expects NPAT for FY2024 to be within the guidance range of $93 million to $97 million,
excluding any impacts of fair value changes on equity investments held and the impact of the de-
designation of derivatives and Australian Bank Programme transaction costs. Excluding the impact of
the (non-cash) increase in provisions for a subset of legacy lending, and Challenger Bank NPAT, the
underlying guidance range is $108 million to $112 million, reflecting Heartland’s underlying
operational performance (which is the basis upon which the underlying 1H2024 results are
presented).

– ENDS –

The persons who authorised this announcement:
Jeff Greenslade, Chief Executive Officer
Andrew Dixson, Chief Financial Officer

For further information and media enquiries, please contact:
Nicola Foley, Group Head of Communications
+64 27 345 6809
nicola.foley@heartland.co.nz
Level 3, Heartland House, 35 Teed Street, Newmarket, Auckland, New Zealand

Heartland Group Holdings Limited | 0800 85 20 20 | PO Box 9919, Newmarket, Auckland 1149 | heartlandgroup.info 15
About Heartland
Heartland is a financial services group with operations in Australia and New Zealand. Heartland has a
long history with roots stretching back to 1875, and is listed on the New Zealand and Australian
stock exchanges (NZX/ASX: HGH).

Heartland’s New Zealand business, Heartland Bank, provides customers with savings and deposit
products, online home loans, reverse mortgages, business loans, car loans and rural loans. In
Australia, Heartland’s main business is currently in reverse mortgages through Heartland Finance
which is a market leader. Heartland also operates StockCo Australia, a specialist livestock financier,
which was acquired by Heartland in May 2022. In October 2022, Heartland announced its intention
to purchase Challenger Bank, a digital bank based in Melbourne, Australia, subject to obtaining the
requisite regulatory approvals.

Heartland’s point of differentiation is its ‘best or only’ strategy – where it focuses on providing
products which are the best or only of their kind through scalable digital platforms. Heartland is
committed to delivering financial solutions through speed and simplicity, particularly via digital
platforms which reduce the cost of onboarding and make it easier for customers to open accounts or
apply for funds when they need it.

More about Heartland: heartlandgroup.info

---

1H2024 Results
For the six-months ended
31 December 2023

Contents
2
01Highlights & strategic update3-8
02Financial results, funding & liquidity9-18
03NZ divisional summary19-26
04AU divisional summary27-32
05Outlook33-34
06Disclaimer, glossary & appendices35-42
2

Jeff Greenslade
Chief Executive Officer Heartland Group
01
Highlights & strategic update

Presentation of results
01
4
Unaudited financial results in this investor presentation are presented on a reported and underlying basis.
•Reported results are prepared in accordance with NZ GAAP and include the impacts of one-offs, both positive and negative, which can make it
difficult to compare performance between periods.
•Underlying results (which are non-GAAP financial information) exclude the impacts of fair value changes on equity investments held, the de-
designation of derivatives, the ABP costs, increase in provisions for a subset of legacy lending, and any other impacts of one-offs. This is intended to
allow for easier comparability between periods, and is used internally by management for this purpose.
Adjustments for underlying results impact net operating income (NOI), operating expenses (OPEX), net profit after tax (NPAT), net interest margin
(NIM) and earnings per share (EPS). Underlying return on equity (ROE), underlying cost to income (CTI) ratio and underlying impairment expense ratio
measures are supplementary, non-GAAP measures that may be used by investors, industry analysts and others in assessing and benchmarking
profitability and performance against the industry and/or other companies. A GAAP and non-GAAP comparative is provided for each of these measures.
Refer to Appendix 3 on page 41 for a detailed reconciliation between reported and underlying financial information, including details about one-offs in
the periods covered in this investor presentation.
General information about the use of non-GAAP financial measures is set out on page 36 of this investor presentation.

Solid performance despite economic headwinds
01
5
Resilience of core lending
portfolios
•Continued Receivables growth in
most core lending portfolios with
good pipelines for further growth
and to expand market share.
•Strong growth in Reverse
Mortgages (NZ up 18.7%, AU up
20.0%)
1
.
•Solid growth in Asset Finance (up
8.9%)
1
and Motor Finance (up
6.4%)
1
– Motor Finance
experienced growth in a market
where total new and used car
sales in NZ were down 12.2%
2
.
•Heartland’s funding, liquidity and
capital positions remain strong.
Becoming a bank in
Australia
•The acquisition of Challenger
Bank is nearing completion with
the regulatory approval process
now in the final stages.
3
•Recent success of Challenger
Bank in the AU deposit market has
exceeded Heartland’s
expectations. This will enable
Heartland to optimise the
advantage of a lower cost of funds
post-acquisition completion.
Growth
•In the long-term Heartland
expects to continue its growth
story.
•Organic growth is expected to
improve in line with reduced
inflation. Similarly cost of funds
and NIM are expected to improve
as interest rates ease.
December 2023 revision
to guidance
•The expected A$3.5 million one-
off FY2024 impact on underlying
NPAT arising from the anticipated
acquisition of Challenger Bank,
positioning Heartland for its next
stage of growth.
•Short-term operational
performance challenges – a
slower than expected start to
FY2024 for Motor Finance and AU
Livestock Finance, and higher
cost of funds.
•Heartland Bank’s response to
issues affecting a subset of
legacy lending.
1
Annualised 1H2024 growth excluding the impact of changes in FX rates.
2
Based on data from Turners, dated December 2023 (data sourced from Waka Kotahi NZ Transport Agency)
3
The acquisition of Challenger Bank remains subject to the requisite regulatory approvals.

1
Refer to Appendix 3 for a reconciliation between reported and underlying NPAT result.
2
NPAT excluding only the impact of fair value changes on equity investments held, the de-designation of derivatives and the ABP costs was $41.2 million.
3
Receivables also includes Reverse Mortgages.
4
Annualised 1H2024 growth excluding the impact of changes in FX rates.
Group financial highlights
6
01
NPAT
2
NIMCTI ratio
Impairment
expense ratio
ROEEPS
Reported
$37.6m3.67%46.5%0.70%7.3%5.3 cps


22.7%vs 1H2023
29 bpsvs 1H2023170bps vs 1H202341 bps vs 1H2023329bps vs 1H20232.0cps vs 1H2023
Underlying
1
$52.7m3.67%43.7%0.23%10.2%7.4 cps


3.6% vs 1H2023
34bps vs
1H2023
33bps vs
FY2023
93 bpsvs 1H20236 bps vs 1H2023183 bpsvs 1H20230.8cps vs 1H2023
Receivables
3
BorrowingsEquity
Interim
dividend
$6,924m$6,839m$1,021m4.0 cps

4.2%
4
vs June 20233.2% vs June 20230.9%vs June 20231.5 cps vs 1H2023

Note: The graph shows 1H2024 growth in Receivables by portfolio excluding the impact of changes in FX rates and intercompany balances. All figures in NZ$m.
1
Annualised 1H2024 growth excluding the impact of changes in FX rates.
2
Based on data from Turners, dated December 2023 (data sourced from Waka Kotahi NZ Transport Agency).
7
Business as Usual Growth
01
6,791
6,935
84
51
(13)
9
(19)
31
(20)
(18)
(8)
(32)
4
153
(76)
Jun-23Reverse
Mortgages NZ
MotorPersonal
Lending
Home LoansBusiness
Relationship
Asset FinanceWholesale
Lending
Open for
Business
Rural
Relationship
Livestock
Finance NZ
Rural DirectReverse
Mortgages AU
Livestock
Finance AU
Dec-23
(11.5%)
6.4%
(33.1%)
8.9%
(54.9%)
20.0%
5.6%
(30.9%)
(3.8%)
(40.4%)
18.7%
(16.3%)
8.6%
$144m (4.2%)
1

$130m (9.1%)
1

Household
NZAU
Business
Rural
$27m (-3.9%)
1

$36m (-10.3%)
1

•Overall Receivables growth of 4.2%
1
.
•Continued strong Reverse Mortgage growth (NZ up 18.7%, AU up 20.0%)
1
.
•Motor Finance growth of 6.4%
1
in market where total new and used car sales in NZ were down 12.2%
2
.

FY2028 growth ambitions
1
Underlying CTI ratio excludes one-off impacts. Refer to Appendix 3 for a reconciliation between reported and underlying result.
2
The average CTI ratio of New Zealand’s main domestic non-major banks excluding Heartland (The Co-operative Bank, Kiwibank, SBS and TSB) was 70.7% for the 12
months to 30 September 2023 (data from the RBNZ Financial Strength Dashboard, valid as at 27 November 2023). The average CTI ratio of Australia’s major banks (ANZ, CBA, NAB and Westpac) was 45.2% for their most recent respective annual reporting periods.
3
Based on APRA ADI Property
Exposure and Heartland Finance data as at 30 September 2022 and 30 September 2023. This does not include data from non-ADI providers of reverse mortgages.
4
The acquisition of Challenger Bank remains subject to requisite regulatory approvals.
8
01
Strong growth in core lending
•Achievement of ambitions requires Receivables growth rates at historical levels only.
CTI ratio of less than 35%
•Underlying CTI ratio of 43.7%
1
, remains significantly lower than the average CTI ratio of NZ’s non-major domestic
banks and much more comparable to the average CTI ratio of major AU banks.
2
•Heartland Bank core banking system upgrade completed in 1H2024, enabling accelerated digitalisation.
•Motor digitalisation through the delivery of branded online origination platforms for Motor Finance dealer partners.
•Process automation with a focus on Heartland Bank’s Collections & Recoveries area to improve internal workflows
and reduce manual effort.
Australia
•Continues to be leading provider of reverse mortgages with market share of 41% at 30 September 2023 (up from
36% at 30 September 2022).
3

•Positioned to benefit from structural tailwinds in AU Livestock sector.
•Subject to completion
4
, the acquisition of Challenger Bank will:
‒make Heartland the only specialist bank provider of both reverse mortgages and livestock finance in AU
‒support ongoing growth and enable expansion into new product segments
‒enable Heartland to optimise the advantage of a lower cost of funds post-acquisition completion.
•Heartland intends to leverage its extensive operational experience in New Zealand to drive expansion into AU.
Underlying
NPAT
$110m
Underlying
NPAT
$200m+
FY2023
Result
FY2028
Ambition
Underlying CTI
ratio
42%
Underlying
CTI ratio
<35%

Andrew Dixson
Chief Financial Officer Heartland Group
02
Financial results, funding & liquidity

ReportedUnderlying
Financial
performance
NII$138.7m

0.1% vs 1H2023
$138.7m

1.4% vs 1H2023
OOI
1
$4.4m

54.9% vs 1H2023
$6.8m

23.1% vs 1H2023
NOI$143.1m

1.0% vs 1H2023
$145.6m

2.7% vs 1H2023
OPEX$66.5m

4.8%vs 1H2023
$63.9m

0.6%vs 1H2023
Impairment Expense$24.0m

160.1% vs 1H2023
$8.0m

13.0%vs 1H2023
Tax Expense$15.0m

26.5%vs 1H2023
$21.2m

2.4%vs 1H2023
NPAT
2
$37.6m

22.7%vs 1H2023
$52.7m

3.6%vs 1H2023
NIM3.67%

29bps vs 1H2023
3.67%

34bps vs 1H2023

33bps vs FY2023
CTI46.5%

170 bps vs 1H2023
43.7%

93bps vs 1H2023
Impairment Expense Ratio
3
0.70%

41 bps vs 1H2023
0.23%

6 bps vs 1H2023
ROE7.3%

329bps vs 1H2023
10.2%

183bps vs 1H2023
EPS5.3 cps

2.0cps vs 1H2023
7.4 cps

0.8cps vs 1H2023
Financial
Position
Receivables
4
$6,924m

4.2%
5
vs June 2023
Borrowings$6,839m

3.2% vs June 2023
Equity$1,021m

0.9%vs June 2023
Equity/Total Assets12.9%

40bps vs June 2023
Group financial results
1
OOI includes fair value gains/losses on investments.
2
Refer to Appendix 3 for a reconciliation between reported and underlying NPAT result.
3
Impairment expense as a percentage of average Receivables.
4
Receivables also includes Reverse Mortgages .
5
Annualised 1H2024 growth excluding the
impact of changes in FX rates.
10
02

Note: All figures in NZ$m. Refer to Appendix 3 for a reconciliation between reported and underlying NPAT result.
1
Compounded growth rate for the period 1H2020-1H2024.
Growth in profitability
11
02
Underlying: 54.7 → 52.7
2.0 (3.6%)
Reported: 48.7 → 37.6
11.1 (22.7%)
NPAT ($ million)
39.9
44.1
47.5
48.7
37.6
32.1
42.9
47.6
47.2
FY20FY21FY22FY23FY24
-23%
1.5%
1
+3%
+8%
+11%
38.2
43.3
47.1
54.7
52.7
38.7
44.6
49.0
55.5
FY20FY21FY22FY23FY24
-4%
+13%
+9%
+16%
8.4%
1
Underlying NPAT ($ million)

Note: NIM is calculated as net interest income/average gross interest earning assets.
1
Underlying gross interest yield increased 157 bps vs 1H2023 to 8.93%, contributing to a 145 bps increase in NIM vs 1H2023.
2
Underlying cost of funds increased 217 bps vs 1H2023 to 5.34%, contributing to a 193 bps decrease in NIM vs 1H2023.
3
Underlying liquid asset yield increased 163 bps vs
1H2023 to 3.52%, contributing to a 14 bps increase in NIM vs 1H2023.
4.30%
4.05%
3.97%
3.97%
3.67%
4.30%
4.16%
4.02%
4.00%
3.67%
Dec-21Jun-22Dec-22Jun-23Dec-23
Reported NIMUnderlying NIM
Net interest margin
12
02
FY24 NIM
outlook
NIM
Underlying NIM
34 bps
Reported NIM
29 bps
Underlying Gross interest yield
8.93%
NIM contribution 145bps
1

vs 1H2023
Underlying Cost of funds
5.34%
NIM contribution 193bps
2

vs 1H2023
Underlying Liquid assets yield
3.52%
NIM contribution 14bps
3

vs 1H2023
NIM compression
expected to be
temporary.
Improvements
anticipated in
CY2025 as
competitive
pressures in the
deposit market
ease and older
Asset Finance and
Motor Finance
loans at lower rates
continue to be
repaid.

Note:
•CTI ratio is calculated as OPEX/NOI.
•Underlying CTI ratio excludes one-off impacts. Refer to Appendix 3 for a reconciliation between reported and underlying result.
43.8%
43.6%
44.8%
44.9%
46.5%
43.1%
42.5%
42.7%
42.0%
43.7%
Dec-21Jun-22Dec-22Jun-23Dec-23
Reported CTI ratioUnderlying CTI ratio
Reported
3.0m (4.8%)
Cost to income ratio
13
02
CTI ratio
FY24 CTI ratio
outlook
Underlying
0.4m (0.6%)
Expected to gradually
improve, via continued
cost discipline, revenue
growth and digitalisation
initiatives.

Note: Impairment expense ratio is calculated as impairment expense/average Receivables.
Provisions
14
02
0.33%
0.29%0.29%
0.36%
0.70%
0.33%
0.25%
0.29%
0.36%
0.23%
Dec-21Jun-22Dec-22Jun-23Dec-23
Impairment Expense Ratio
Reported Impairment Expense RatioUnderlying Impairment Expense Ratio
90.9
112.0
132.4
126.9
178.6
1.70%
1.81%
2.05%
1.87%
2.58%
Dec-21Jun-22Dec-22Jun-23Dec-23
Non Performing Loans
Non Performing LoansNon Performing Loans Ratio
NPL
 51.7m
vs 30 June 2023
NPL ratio
 71 bps
vs 30 June 2023
Legacy Business and Relationship lending: $5.5 million.
•$4.5 million increase in specific provisions against legacy loans in segments of
the market Heartland Bank no longer lends to where economic conditions have
decreased confidence in collectability.
•$1.0 million collective provision.
Longer standing Motor Finance loans: $10.5 million increase in collective
provisions.
43.6
44.0
45.7
50.9
53.5
9.6
8.0
8.0
2.4
16.0
53.2
52.0
53.7
53.3
69.5
1010.0
1060.0
1110.0
1160.0
1210.0
1260.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Dec-21Jun-22Dec-22Jun-23Dec-23
Total Provisions
UnderlyingCovid-19
Overlay
Economic
Overlay
Increase in
Provisions
CPI

1
Underlying ROE refers to ROE calculated using underlying results. When calculated using reported results, ROE was 7.3%, down 329 bps. See page 4 for more information about the use of ROE, a supplementary, non-GAAP measure.
2
Total fully imputed dividends for 1H2024 (interim) and 2H2023
(final) divided by the closing share price as at 26 February 2024 of $1.17.
3
Total fully imputed dividends for 1H2023 (interim) and 2H2022 (final) divided by the closing share price as at 24 February 2023 of $1.75.
4
That is, the strike price under the DRP will be 98.0% of the volume weighted
average sale price of Heartland shares over the five trading days following the Record Date. For the full details of the DRP and the Strike Price calculation, refer to the Heartland DRP offer document dated 10 December 2018.
•Underlying ROE of 10.2% (down 183 bps vs 1H2023).
1
•EPS of 5.3 cps, down 2.0 cps compared with 1H2023.
•Underlying EPS of 7.4 cps (down 0.8 cps vs 1H2023).
•Interim dividend of 4.0 cps, down 1.5 cps on 1H2023.
•Dividend yield of 11.9%
2
(1H2023: 8.7%
3
).
•A slightly lower interim dividend is consistent with current earnings and previous
payout ratios and does not reflect a change in policy.
•Heartland’s DRP will apply to the interim dividend with a 2.0% discount.
4
Shareholder return
15
02
12.1%
12.6%
12.1%
11.9%
10.2%
Dec-21Jun-22Dec-22Jun-23Dec-23
Underlying ROE
6.9
7.6
8.1
7.3
5.3
5.6
7.3
8.0
6.7
FY20FY21FY22FY23FY24
EPS (cps)
Interim EPSFinal EPS

New Zealand
•Heartland Bank increased borrowings by $217.3 million (4.6%) to $4,963.5 million.
•Deposits grew $82.7 million (2.0%) to $4,213.8 million, driven by competitive pricing on targeted products, including Heartland’s Notice Saver
offerings, particularly the Digital Saver product which launched in October 2023.
•Despite market competition, Heartland Bank’s cost of funds outperformed its key peer challenger banks in Q1.
1
•Other borrowings increased by $134.6 million (21.9%), largely due to an increased drawdown in Heartland Bank’s committed auto warehouse
facility by $149.5 million. Partially offset by the decreased amount of Heartland Bank’s issuance of short-term Commercial Paper.
•$100 million limit increase to Heartland Bank’s committed auto warehouse facility was executed in September 2023 taking the total limit
outstanding to $500 million.
1
Based on dashboard data from the RBNZ for the periodJuly 2023-September 2023.
2
Includes intercompany deposits.
Core funding
Ratio
89.7%
as at Dec 23
vs 75% regulatory
minimum
↑ 0.06pps vs Jun 23
1-week
Mismatch
8.52%
as at Dec 23
vs 0% regulatory
minimum
↓ 0.17pps vs Jun 23
1-month
mismatch
8.11%
as at Dec 23
vs 0% regulatory
minimum
↓ 0.23pps vs Jun 23
Funding & liquidity
16
02
2,178
2,189
2,445
2,629
2,816
851
895
807
783
783
307
513
825
719
614
235
268
191
227
377
278
273
120
220
225
110
209
207
168
148
3,959
4,347
4,596
4,746
4,963
Dec-21Jun-22Dec-22Jun-23Dec-23
HBL Funding Composition
2
$m
Term depositsCall deposits
Savings depositsSecuritised funding
Retail bondsOther wholesale funding
165
132
209
173
123
296
274
269
315
389
138
221
297
216
162
599
628
775
704
674
Dec-21Jun-22Dec-22Jun-23Dec-23
HBL Liquidity Composition $m
Undrawn limitInvestmentsCash

1
StockCo Australia was transferred from Heartland to Heartland Australia on 1 August 2023.
2
Excluding intercompany funding from Heartland Australia.
3
For comparison purposes, StockCo Australia is included from the acquisition date of 31 May 2022.
4
Includes cash and undrawn limit of securitised
funding.
Funding & liquidity
Australia
•Heartland Australia increased borrowings by A$4.2
million (0.2%) to A$1,736.7 million.
•Excluding StockCo Australia
1
, borrowings increased
by A$74.9 million (5.1%) to A$1,557.1 million.
•An A$50 million tap issue was completed in October
2023 and a further A$105 million tap MTN was
issued in December 2023. The proceeds were used
to refinance another maturing facility and provide
further Reverse Mortgage funding.
•The aggregate outstanding issuance under
Heartland Australia’s MTN programme was A$395
million as at 31 December 2023.
•The aggregate senior limits of the two Reverse
Mortgage securitisation warehouses were
expanded by A$200 million, providing access to
A$1.77 billion of committed funding in aggregate.
•StockCo Australia decreased borrowings by A$70.6
million (28.2%) to A$179.6 million
2
, reflecting the
current book size.
17
02
865
919
1,005
1,119
1,154
266
281
363
242
402
121
1
296
253
250
180
1,131
1,497
1,621
1,733
1,737
Dec-21Jun-22Dec-22Jun-23Dec-23
Heartland Australia
Funding Composition
3
A$m
Securitised fundingMTNsOther BorrowingsStockCo AU...
117
154
119
55
220
64
58
53
47
74
21
72
89
160
180
233
244
191
454
Dec-21Jun-22Dec-22Jun-23Dec-23
Heartland Australia
Liquidity Composition
3
A$m
Undrawn limitCashStockCo AU
(Liquidity)
4

•With a regulatory capital ratio of 14.07%
1
,
Heartland Bank continues to operate
significantly in excess of regulatory minimums
and is well positioned to meet the RBNZ’s
future higher capital requirements.
•The RBNZ future capital requirements are for a
core capital ratio of 11.50% and a total capital
ratio of 16.00% by 1 July 2028.
1
Heartland Bank’s regulatory capital ratio decreased slightly to 14.07% as at 31 December 2023 (30 June 2023: 14.71%) driven by balance sheet growth and the FY2023 dividend payment (paid on 20 September 2023).
Note:
•Retained earnings includes current NPAT.
•StockCo Australia was transferred from Heartland to Heartland Australia on 1 August 2023.
•RBNZ total capital ratio plus prudential capital buffer requirement of 10.50% as at 31 December 2023.
Capital
18
02
Total Tier 1 Capital
contribution (0.63%)
Heartland Capital Allocation $m
Heartland Capital Movement $m
700
284
37
Heartland BankHeartland AustraliaHeartland Group Holdings
$1,021 million (12.9% of total assets) as at 31 December 2023

Leanne Lazarus
Chief Executive Officer Heartland Bank
03
NZ divisional summary

20
NZ Household
03
$2,957m
Household Receivables
 $130m (9.1%)
3
vs June 2023
$59m
Household NOI
$0.1m (0.1%)
vs 1H2023
Reverse
Mortgages
$23.8m, 40.4%
$3.3m (16.3%)
Motor
Finance
$31.6m, 53.6%
$1.1m (3.3%)
Reverse
Mortgages
$972.5m, 32.9%
$83.9m (18.7%)
3
Motor
Finance
$1,621.9m, 54.8%
$50.6m (6.4%)
3
Home Loans
1
$328.6m, 11.1%
$9.0m (5.6%)
3
1
Includes Online Home Loans and legacy Retail Mortgages.
2
Excluding the impact of changes in FX rates.
3
Annualised 1H2024 growth excluding the impact of changes in FX rates.
4
Based on data from Turners, dated December 2023 (data sourced from Waka Kotahi NZ Transport Agency).
5
Tesla
preferred finance provider launched in February 2024.
6
Excludes legacy Retail Mortgages.
7
Based on RBNZ’s Registered banks and non-bank lending institutions: Sector lending (C5) data at 31 December 2023 compared with 30 June 2023. Data accurate as at 31 January 2024.
Personal Lending
2
$34.1m, 1.2%
$13.0m (54.9%)
3
Personal Lending
2
$2.1m, 3.5%
$1.4m (39.5%)
Home Loans
1
$1.5m, 2.5%
 $1.0m (40.0%)
Reverse Mortgages
•Strong growth of 18.7%
3
.
•Current demand driven by the ongoing cost-of-
living strain placed on older homeowners.
•Accelerated growth expected in 2H2024.
Motor Finance
•Very pleasing growth of 6.4%
3
in a market where
total new and used car sales in NZ were down
12.2%
4
.
•Strengthened distribution network (including
new partnerships with MG Motor and Tesla
5
).
Online Home Loans
•Growth of 5.7%
6
well above the overall NZ
market expansion in home lending of 1.7%.
7
•Retention exceeded 90% for customers whose
fixed rates came up for renewal in 1H2024.
Personal Lending
•The portfolio is not actively originating.
•The Harmoney personal loans channel is closed
to new business and in run off.

Motor Finance & Collections position
03
21
Issue affecting a subset of longer dated loans
•Economic conditions impacting more severely on a subset of longer dated loans which arose from operational issues in
Heartland Bank’s Collections & Recoveries area and do not reflect any underlying issues with the credit quality of the book.
This is primarily a resourcing issue, and these challenges are being actively resolved as described below.
•Resourcing issues were caused by illness, employee turnover due to overseas travel and a focus on Heartland Bank’s core
banking system upgrade (which is now complete).
Active resolution
•Additional resourcing to full capacity.
•Specialised recruitment strategy underway for a more stable and experienced workforce, with increased regional focus.
•While Heartland Bank is addressing resourcing, it remains a challenge.
•Increased automation is required to improve internal workflows and reduce manual effort. This includes upgrading the
debt management and collections system, integration with core banking systems, and making greater use of data and
analytics to drive collections strategies.

22
NZ Reverse Mortgages portfolio analytics
03
1
Annualised 1H2024 growth excluding the impact of changes in FX rates.
2
Compounded annual growth rate for the period 1 July 2018 – 30 December 2023.
$972m
NZ Reverse Mortgages
+$84m (18.7%)
1
vs June 2023
$135,139
Average
loansize
78
Weighted average
borrowers’ age
16.7%
Compounded annual
growth rate
2
9.6%
Average
originationLVR
22.8%
Weighted
averageLVR
0.0%
Proportion ofthe
loan book over75%LVR
0
Number ofloans in the
book over75%LVR
$96m
(-$13m vs 1H2023)
1H2024 origination
$58m
(+$7m vs 1H2023)
Total repayments in 1H2024
12.9%
(vs 14.0% in 1H2023)
1H2024 repayment rate
22.8%
(vs 31.4% in 1H2023)
Repayments from vintage loans
(+11 years)

23
NZ Business
03
$1,347m
Business Receivables
1
 $26.8m (3.9%)
2
vs June 2023
$34m
Business NOI
 $3.5m (9.3%)
vs 1H2023
Wholesale
Lending
$225.0m, 16.7%
$20.1m (16.3%)
2
Asset
Finance
$713.3m, 53.0%
$30.6m (8.9%)
2
Relationship
$309.5m, 23.0%
$19.0m (11.5%)
2
Wholesale
Lending
$5.3m, 15.8%
 $0.8m (12.5%)
Asset
Finance
$14.3m, 42.2%
$0.6m (4.1%)
Relationship
$8.8m, 26.0%
$0.9m (9.1%)
1
Excluding the impact of changes in FX rates.
2
Annualised 1H2024 growth excluding the impact of changes in FX rates.
O4B
1
$98.9m, 7.3%
 $18.2m (30.9%)
2
Asset Finance
•Growth of 8.9%
2
is strong against a backdrop
of lower margin loans taking longer to roll off
as customers take longer to refinance assets.
Wholesale Lending
•Growth from new business is anticipated in
2H2024 as Heartland Bank continues to
expand its Motor Finance dealer network,
presenting Wholesale Lending opportunities
with dealerships.
Relationship
•Includes legacy Business Relationship
lending being run down as Heartland
continues to transition to loans which
present lower risk and are more cost efficient
to transact.
O4B
$5.5m, 16.1%
 $1.2m (18.2%)

24
NZ Rural
03
$664m
Rural Receivables
 $36.4m (10.3%)
1
vs June 2023
Rural
Relationship
$416.2m, 62.7%
$8.2m (3.8%)
1
Livestock
Finance
$159.3m, 24.0%
 $31.9m (33.1%)
1
Rural Direct
$88.6m, 13.3%
$3.7m (8.6%)
1
$17m
Rural NOI
 $0.2m (1.2%)
vs 1H2023
Rural
Relationship
$10.6m, 63.2%
 $1.6m (13.3%)
Livestock
Finance
$3.9m, 23.2%
$0.2m (5.4%)
Rural Direct
$2.3m, 13.6%
$1.2m (118.8%)
Livestock Finance
•Decrease in Receivables was driven by the
normal seasonal fluctuations, with growth
expected in 2H2024.

Rural Direct
•Weak livestock price conditions and higher
costs reduced confidence in the market and
led to fewer farm sales, resulting in subdued
growth.
Rural Relationship
•Reduction in Receivables of $8.2 million due
to the continued transition of the book away
from large, complex, low margin lending.
1
Annualised 1H2024 growth excluding the impact of changes in FX rates.

$4,968m
NZ Receivables
 $67m (2.7%)
1
vs June 2023
25
NZ divisional summary
03
Household
$2,957m,
59.5%
Rural
$664m,
13.4%
Business
$1,347m,
27.1%
$110m
NZ NOI
 $4m (3.3%)
vs 1H2023
Household
$59m,
53.8%
Rural
$17m,
15.3%
Business
$34m,
30.9%
Note: 1H2024 growth in Receivables by portfolio is excluding the impact of changes in FX rates and intercompany balances. All figures in NZ$m.
1
Annualised 1H2024 growth excluding the impact of changes in FX rates.

4,901
4,968
84
51
(13)
9
(19)
31
(20)
(18)
(8)
(32)
4
Jun-23Reverse
Mortgages
MotorPersonal
Lending
Home LoansBusiness
Relationship
Asset FinanceWholesale
Lending
Open for
Business
Rural
Relationship
Livestock
Finance NZ
Rural DirectDec-23
(11.5%)
6.4%
(33.1%)
8.9%
(54.9%)
5.6%
(30.9%)
(3.8%)
18.7%
(16.3%)
8.6%
26
NZ divisional summary
03
$67m (2.7%)
1

$130m (9.1%)
1

Household
Business
Rural
$36m (-10.3%)
1

$27m (-3.9%)
1

Note: The graph shows 1H2024 growth in Receivables by portfolio excluding the impact of changes in FX rates and intercompany balances. All figures in NZ$m.
1
Annualised 1H2024 growth excluding the impact of changes in FX rates

Chris Flood
Deputy Chief Executive Officer Heartland Group
04
AU divisional summary

Preparation for completion of Challenger Bank acquisition
1
04
28
Recruitment of key
roles well advanced
to support bank
operations,
expansion ambitions
and compliance with
regulatory standards.
Transaction
related costs
expected to be
expensed in FY2024
which are one-off,
non-recurring in
nature and do not
impact underlying
performance.
2
Early Challenger Bank AU deposit market experience
exceeding Heartland expectations
•Challenger Bank is actively raising deposits ahead of
being acquired by Heartland Bank and will continue to do
so. This will enable Heartland to optimise the advantage
of a lower cost of funds post-acquisition completion.
•Recent success of Challenger Bank in the AU deposit
market has exceeded Heartland’s expectations.
•In the seven-week period commencing 8 January 2024,
retail deposit growth of $528 million was achieved, at a
rate which is 1.34% lower than Heartland Australia’s
current cost of funds.
2
Premises leased
in Melbourne and
Sydney to
accommodate
growth.
1
The acquisition of Challenger Bank remains subject to requisite regulatory approvals.
2
Month to date January 2024 cost of funds for Heartland Australia (including StockCo Australia).
2
Refer to ABP costs in Appendix 3.

1
Excluding the impact of changes in FX rates.
2
Annualised 1H2024 growth excluding the impact of changes in FX rates.
29
AU Household
04
$1,668m
Household Receivables
1
 $152.9m (20.0%)
2
vs June 2023
$26m
Household NOI
 $3.1m (13.4%)
vs 1H2023
Reverse Mortgages
1
•Strong growth of 20.0%.
2
•Cost-of-living requests (debt consolidation,
supplementing income) have increased
while lifestyle requests (car, travel) have
softened. Home improvements and debt
consolidation remain the top two loan
purposes.
•Growth is expected to remain strong in
2H2024 as older Australians seek to remain
in their home as they age.

30
AU Reverse Mortgages portfolio analytics
1
1
Excluding the impact of changes in FX rates (where applicable). All figures in NZD.
2
Compounded annual growth rate for the period 1 July 2018 – 30 December 2023.
3
Annualised 1H2024 growth excluding the impact of changes in FX rates.
$1,668m
AU Reverse Mortgages
+$153m (20.0%)
3
vs June 2023
$190,849
Average
loansize
77
Weighted average
borrowers’ age
22.6%
Compounded annual
growth rate
2
11.9%
Average
originationLVR
22.7%
Weighted
averageLVR
0.1%
Proportion ofthe
loan book over75%LVR
3
Number ofloans in the
book over75%LVR
$185m
(-$1m vs 1H2023)
1H2024 origination
$104m
(-$3m vs 1H2023)
Total repayments in 1H2024
13.8%
(vs 16.7% in 1H2023)
1H2024 repayment rate
16.1%
(vs 17.2% in 1H2023)
Repayments from vintage loans
(+11 years)
04

AU Rural
31
04
$299m
Rural Receivables
1
 $76.4m (40.4%)
2
vs June 2023
$8m
Rural NOI
 $3.3m (28.6%)
vs 1H2023
1
Excluding the impact of changes in FX rates.
2
Annualised 1H2024 growth excluding the impact of changes in FX rates.
3
Data from the National Livestock Reporting Service.
Livestock Finance
•Adverse weather conditions and drought
concerns continued to negatively impact
livestock prices in 1H2024.
•With the reducing risk of drought, livestock
prices have improved. Cattle prices are now
above the 10- and 20-year averages and
Trade Lamb prices have nearly doubled over
recent weeks and now sit above the 20-year
average and slightly below the 10-year
average.
3
•Heartland expects a stronger performance
in 2H2024, with growth on a value basis.

32
AU divisional summary
04
$1,967m
AU Receivables
1
 $76.5m (8.0%)
2
vs June 2023
Household
$1,668m,
84.8%
Rural
$299m,
15.2%
$34m
AU NOI
 $0.2m (0.5%)
vs 1H2023
Household
$26m,
76.2%
Rural
$8m, 23.8%
1
Excluding the impact of changes in FX rates.
2
Annualised 1H2024 growth excluding the impact of changes in FX rates.

Jeff Greenslade
Chief Executive Officer Heartland Group
05
Outlook

FY2024 outlook
34
05
FY2024 NPAT
•Heartland expects NPAT for
FY2024 to be within the guidance
range of $93 million to $97 million,
excluding any impacts of fair value
changes on equity investments
held and the impact of the de-
designation of derivatives and ABP
transaction costs.
•Excluding the impact of the (non-
cash) increase in provisions for a
subset of legacy lending, and
Challenger Bank NPAT, the
underlying guidance range is $108
million to $112 million, reflecting
Heartland’s underlying operational
performance (which is the basis
upon which the underlying 1H2024
results are presented).
Complete the acquisition of Challenger Bank within 2H2024
1
•The focal point for 2H2024 and a critical step in Heartland’s strategy for
expansion in AU market – and ultimately towards achieving its FY2028
ambitions.
Growth expected through core lending portfolio resilience
•2H2024 is expected to be challenging, however improved organic growth is
anticipated in line with reduced inflation.
•Heartland is confident in the resilience of its core lending portfolios and ‘best
or only’ strategy – with a particular focus on Reverse Mortgages.
Growth supported by digitalisation and cost discipline
•Heartland’s ability to achieve a superior underlying CTI ratio over time and
enable scalable growth is underpinned by increased digitalisation, cost
discipline and revenue growth.
•Increased levels of digitalisation and automation enabled by Heartland Bank’s
core banking system upgrade, completed in 1H2024.
1
Subject to the requisite regulatory approvals.

06
Disclaimer, glossary & appendices

Disclaimer
This presentation has been prepared by Heartland Group Holdings Limited (NZX/ASX:
HGH) (the Company or Heartland) for the purpose of briefings in relation to its financial
statements.
The presentation and the briefing (together the Presentation) contain summary information
only, which should not be relied on in isolation from the full detail in the financial statements.
The information in the Presentation has been prepared with due care and attention, but its
accuracy, correctness and completeness cannot be guaranteed. No person (including the
Company and its directors, shareholders and employees) will be liable to any other person
for any loss arising in connection with the Presentation.
The Presentation outlines a number of the Company’s forward-looking plans and projections.
Those plans and projections reflect current expectations, but are inherently subject to risk
and uncertainty, and may change at any time. There is no assurance that those plans will be
implemented or that projections will be realised. You are strongly cautioned not to place
undue reliance on any forward-looking statements, particularly in light of the current
economic climate.
No person is under any obligation to update this presentation at any time after its release or
to provide further information about the Company.
The information in this presentation is of a general nature and does not constitute financial
product advice, investment advice or any recommendation. Nothing in this presentation
constitutes legal, financial, tax or other advice.
Non-GAAP measures
This presentation contains references to non-GAAP measures including underlying profit or
loss, underlying ROE, underlying CTI ratios and underlying EPS. A reconciliation between
reported and the non-GAAP measure of underlying financial information is included on page
41.
Because Heartland complies with accounting standards, investors know that comparisons
can be made with confidence between reported profits and those of other companies, and
there is integrity in Heartland’s reporting approach. These non-GAAP figures are provided as
a supplementary measure for readers to assess Heartland’s performance alongside NZ GAAP
reported measures, where one-offs, both positive and negative, can make it difficult to
compare profits between years. However, these non-GAAP measures do not have
standardised meanings prescribed by GAAP and should not be viewed in isolation nor
considered a substitute for measures reported in accordance with NZ GAAP.
Non-GAAP financial information has not been subject to review by PricewaterhouseCoopers,
Heartland’s external auditor.
All amounts are in New Zealand dollars unless otherwise indicated. Financial data in this
presentation is as at 31 December 2023 unless otherwise indicated. Any other financial
information provided as at a date after 31 December 2023 has not been audited or reviewed
by any independent registered public accounting firm.
36
06

Glossary
37
06
ABP
Australia Bank ProgrammeNOINet operating income
ADI
Authorised deposit-taking institutionNPATNet profit after tax
APRA
Australian Prudential Regulation AuthorityNPLNon performing loan
bps
Basis pointsO4BOpen for Business
Challenger Bank
Challenger Bank LimitedOOIOther operating income
CPI
Consumers price indexOPEXOperating expenses
cps
Cents per shareppsPercentage points
CTI ratio
Cost to income ratioRBNZReserve Bank of New Zealand
DRP
Dividend Reinvestment PlanReceivablesGross Finance Receivables
EPS
Earnings per shareROEReturn on Equity
FX
Foreign currency exchangeStockCo Australia
Comprised of StockCo Australia Management Pty Ltd, StockCo Holdings 2
Pty Ltd and their subsidiaries
Harmoney
Harmoney Corp LimitedCY20252025 calendar year (1 January to 31 December 2025)
Heartland
Heartland Group Holdings Limited or the CompanyFY2024Financial year ending 30 June 2024
Heartland Australia
Heartland Australia Holdings Pty Ltd and its direct and indirect
wholly-owned subsidiaries
FY2028Financial year ending 30 June 2028
Heartland Bank, HBL
Heartland Bank Limited1H2020First half of FY2020 (1 July to 31 December 2019)
LVR
Loan-to-value ratio1H2023First half of FY2023 (1 July to 31 December 2022)
MTN
Medium Term Note1H2024First half of FY2024 (1 July to 31 December 2023)
NII
Net interest income2H2024Second half of FY2024 (1 January to 30 June 2024)
NIM
Net interest marginQ1First quarter of FY2024 (1 July to 30 September 2023)

Heartland’s sustainability framework is built on three key pillars: environment, people and financial wellbeing.
Sustainability
38
06
Heartland is making good progress to meet the
new Climate-Related Disclosures
obligations in NZ, with Heartland’s first climate
statement required as part of full year reporting
for FY2024.
Heartland Bank awarded Canstar NZ’s Bank
of the Year – Savings (sixth year in a row).
Plus, Five-star ratings for Direct Call Account,
32-Day Notice Saver Account and 90-Day
Notice Saver Account.
Heartland’s Board established a
Sustainability Committee to oversee
Heartland’s sustainability strategy and
implementation plans.
StockCo announced a two-year pilot project
with Australian farmer-led software
provider Ruminati, to help producers track
and validate on-farm climate action across the
supply chain.
Heartland Finance, awarded a Non-Bank of
the Year Excellence Award at the
Australian Mortgage Awards 2023 (fourth
year in a row).
The Manawa Ako internship welcomed 30 Māori
and Pasifika interns in its sixth intake, with the
greatest number of applications since
programme establishment in 2017.

ReportedUnderlying
$m 1H241H23Change ($)Change (%)1H241H23Change ($)Change (%)
NII138.7138.9(0.2)(0.1%)138.7140.8(2.0)(1.4%)
OOI
1
4.42.81.554.9%6.88.9(2.0)(23.1%)
NOI143.1141.71.41.0%145.6149.6(4.1)(2.7%)
OPEX66.563.43.04.8%63.563.9(0.4)(0.6%)
Impairment Expense24.09.214.8160.1%8.09.2(1.2)(13.0%)
Profit Before Tax52.669.0(16.5)(23.8%)74.076.5(2.5)(3.2%)
Tax Expense15.020.4(5.4)(26.5%)21.221.8(0.5)(2.4%)
NPAT37.648.7(11.1)(22.7%)52.754.7(2.0)(3.6%)
NIM
3.67%3.97%(29 bps)3.67%4.02%(34 bps)
CTI
46.5%44.8%170 bps43.7%42.7%93 bps
Impairment Expense Ratio
2
0.70%0.29%41 bps0.23%0.29%(6 bps)
ROE
7.3%10.6%(329 bps)10.2%12.1%(183 bps)
EPS
5.3 cps7.3 cps
(2.0cps)7.4 cps8.2 cps(0.8 cps)
1
Includes fair value movements.
2
Impaired asset expense as a percentage of average Receivables.
Appendix 1: Financial performance
39
06

$m31 Dec 202330 June 2023Movement ($m)Movement (%)
Liquid Assets678627528.2%
Gross Finance Receivables6,9246,7911332.0%
Provisions(70)(53)(16)(30.5%)
Other Assets382383(1)(0.3%)
Total Assets7,9147,7471672.2%
Retail Deposits4,2144,131832.0%
Other Borrowings2,6252,4961285.1%
Total Funding6,8396,6272113.2%
Other Liabilities5589(34)(38.6%)
Equity1,0211,031(10)(0.9%)
Total Equity & Liabilities7,9147,7471672.2%
Appendix 2: Financial position
40
06

1H2024 one-offs and non-cash technical items included in the reported result:
•Hedging: a $4.3 million loss was recognised in relation to derivatives that were de-
designated from prior hedge accounting relationships in FY2022.
•Valuation of equity investments: a $1.9 million fair value gain was recognised on investment
in Harmoney shares.
•Other provisions: $0.1 million of unwarranted legacy provisions were released.
•ABP costs: $2.3 million of transaction and other costs in relation to becoming an ADI in
Australia. In addition, $3.3 million of costs directly attributable to applying to become an ADI
have been capitalised as an intangible asset.
•Other non-recurring expenses: $0.8 million.
•Impairment provision: a $16.0 million increase in provisions to respond to issues affecting a
subset of legacy lending.
1H2023one-offs and non-cash technical itemsincluded in the reported result:
•Hedging: a $3.6 million loss was recognised in relation to derivatives that were de-
designated from prior hedge accounting relationships in FY2022.
•Valuation of equity investment in Harmoney: a $2.4 million fair value loss was recognised
on investment in Harmoney.
•Bridging loan: a $1.9 million interest expense was recognised for a A$158 million bridging
loan taken by Heartland to acquire StockCo Australia, which was fully repaid in September
2022.
•Other non-recurring expenses: ($0.5 million).
Appendix 3: Reconciliation of reported with underlying results
41
06
$m1H20241H2023Movement ($)Movement (%)
Reported NOI143.1 141.7 1.4 1.0%
Less:
Hedge accounting Impacts(4.3)(3.6) (0.7)
Net fair value gain/loss on investments1.9(2.4) 4.3
StockCo Australia acquisition (bridging loan)-(1.9)1.9
Underlying NOI145.6 149.6 (4.1) (2.7%)
Reported OPEX66.5 63.4 3.0 4.8%
Less:
Legacy provisions and accruals(0.1)-(0.1)
ABP costs2.3 -2.3
Other non-recurring items0.8 (0.5) 1.2
Underlying OPEX
63.5 63.9 (0.4)
(0.6%)
Reported impairment expense24.0 9.2 14.8 160.1%
Less:
Increase in provisions for a subset of legacy
lending
16.0 -
16.0
Underlying impairment expense
8.0 9.2 (1.2)
(13.0%)
Reported NPAT37.6 48.7
(11.1)
(22.7%)
Less:
Post-tax impact of one-offs(15.1)(6.0)(9.1)
Underlying NPAT
52.7 54.7 (2.0)
(3.6%)
Reported NIM
3.67%3.97%
(29 bps)
Underlying NIM
3.67%4.02%(34 bps)
Reported CTI
46.5%44.8%170 bps
Underlying CTI
43.7%42.7%93 bps
Reported ROE
7.3%10.6%(329 bps)
Underlying ROE
10.2%12.1%(183 bps)

Investor information
For more information
heartlandgroup.info/investor-information
Investor & media relations
Nicola Foley
Group Head of Communications
+64 27 345 6809
nicola.foley@heartland.co.nz
Thank you

---

Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)


Results for announcement to the market
Name of issuer Heartland Group Holdings Limited
Reporting Period 6 months to 31 December 2023
Previous Reporting Period 6 months to 31 December 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$143,109 1.0%
Total Revenue $143,109 1.0%
Net profit/(loss) from
continuing operations
$37,600 -22.7%
Total net profit/(loss) $37,600 -22.7%
Interim/Final Dividend
Amount per Quoted Equity
Security
$ 0.04000000
Imputed amount per Quoted
Equity Security
$ 0.01555556
Record Date 06/03/2024
Dividend Payment Date 20/03/2024
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.05 $1.09
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood

Authority for this announcement
Name of person

authorised
to make this announcement
Andrew Dixson, Chief Financial Officer
Contact person for this
announcement
Nicola Foley, Group Head of Communications
Contact phone number 027 345 6809
Contact email address nicola.foley@heartland.co.nz
Date of release through MAP

27/02/2024

Unaudited financial statements accompany this announcement.

---

Distribution Notice




Section 1: Issuer information
Name of issuer Heartland Group Holdings Limited
Financial product name/description Ordinary shares
NZX ticker code HGH
ISIN (If unknown, check on NZX
website)
NZHGHE0007S9
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies X
Record date 06/03/2024
Ex-Date (one business day before the
Record Date)
05/03/2024
Payment date (and allotment date for
DRP)
20/03/2024
Total monies associated with the
distribution
1

$ 28,610,610.80
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$ 0.05555556
Gross taxable amount
3
$ 0.05555556
Total cash distribution
4
$ 0.04000000
Excluded amount (applicable to listed
PIEs)
NIL
Supplementary distribution amount $ 0.00705882
Section 3: Imputation credits and Resident Withholding Tax
5

Is the distribution imputed

Fully imputed – YES
Partial imputation
No imputation

1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.

If fully or partially imputed, please
state imputation rate as % applied
6

28%
Imputation tax credits per financial
product
$ 0.01555556
Resident Withholding Tax per
financial product
$ 0.00277778
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
2.0%
Start date and end date for
determining market price for DRP
07/03/2024 13/03/2024
Date strike price to be announced (if
not available at this time)
14/03/2024
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
New issue
DRP strike price per financial product
$
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
07/03/2024, 5.00pm NZT
Section 5: Authority for this announcement
Name of person

authorised to make
this announcement
Andrew Dixson, Chief Financial Officer
Contact person for this
announcement
Nicola Foley, Group Head of Communications
Contact phone number 027 345 6809
Contact email address nicola.foley@heartland.co.nz
Date of release through MAP

27/02/2024






6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.

---

INTERIM
FINANCIAL STATEMENTS
For the six months ended 31 December 2023

P. 2
Contents


Page
General Information.................................................................................................................................................................. .......3
Directors.................................................................................................................................................................................... .........3
Auditor........................................................................................................................................................................................... ....3
Directors’ Statement................................................................................................................................................................. ...... 4
Consolidated Interim Statement of Comprehensive Income......................................................................................................5
Consolidated Interim Statement of Changes in Equity...............................................................................................................6
Consolidated Interim Statement of Financial Position................................................................................................................7
Consolidated Interim Statement of Cash Flows...........................................................................................................................8
Notes to the Interim Financial Statements
1 Interim financial statements preparation......................................................................................................................10
Performance
2 Segmental analysis............................................................................................................................................................11
3 Net interest income..................................................................................................................................................... ......13
4 Operating expenses...........................................................................................................................................................13
5 Impaired asset expense.............................................................................................................................................. ......14
6 Earnings per share............................................................................................................................................................ 14
Financial Position
7 Finance receivables measured at amortised cost.........................................................................................................15
8 Borrowings..........................................................................................................................................................................17
9 Share capital and dividends.............................................................................................................................................18
10 Related party transactions and balances........................................................................................................................18
11 Intangible assets............................................................................................................................................................... 19
12 Fair value....................................................................................................................................................................... ......21
Risk Management
13 Enterprise risk management............................................................................................................................................25
Other Disclosures
14 Contingent liabilities and commitments.......................................................................................................................25
15 Events after reporting date..............................................................................................................................................25
Independent auditor’s review report........................................................................................................................................... 26

P. 3
General Information

Heartland Group Holdings Limited (HGH) is incorporated in New Zealand and registered under the Companies Act 1993. The
shares in HGH are listed on the New Zealand Exchange (NZX) main board and the Australian Securities Exchange (ASX) under a
foreign exempt listing.

HGH's address for service is Level 3, 35 Teed Street, Newmarket, Auckland 1023.


Directors

All Directors of HGH reside in New Zealand with the exception of Ellen Frances Comerford and Geoffrey Edward Summerhayes
who reside in Australia. Communications to the Directors can be sent to Heartland Group Holdings Limited, Level 3, 35 Teed
Street, Newmarket, Auckland 1023.

There have been no other changes in the composition of the Board of Directors of HGH since 30 June 2023 to the six months
ended 31 December 2023.

Auditor

PricewaterhouseCoopers
PwC Tower, Level 27
15 Customs Street West
Auckland 1010

P. 4
Directors’ Statement
The Interim Financial Statements for the six months ended 31 December 2023 for HGH and its subsidiaries (together the Group)
are dated 26 February 2024 and have been signed by all the Directors.
G R Tomlinson (Chair)E F Comerford
J K Greenslade K Mitchell
G E Summerhayes

P. 5
Consolidated Interim Statement of Comprehensive Income
For the six months ended 31 December 2023




Unaudited
6 Months to December
2023
Unaudited
6 Months to December
2022


$000's Note

Interest income
3
319,522 240,716
Interest expense
3
180,774 101,813
Net interest income 138,748 138,903



Operating lease income

2,999 2,696
Operating lease expense

2,136 1,862
Net operating lease income 863 834



Lending and credit fee income

5,906 6,397
Other expenses

(4,270) (1,966)
Net operating income 141,247 144,168



Operating expenses
4
66,498 63,450
Profit before fair value gain on investments, impaired asset
expense and income tax
74,749 80,718

Fair value gain/(loss) on investments

1,862 (2,449)
Impaired asset expense
5
24,036 9,240
Profit before income tax 52,575 69,029



Income tax expense

14,975 20,367
Profit for the period 37,600 48,662

Other comprehensive income/(loss)

Items that are or may be reclassified subsequently to profit or loss:

Effective portion of change in fair value of derivative financial
instruments for cashflow hedges

(11,083) 8,536

Movement in fair value reserve (40) (752)
Movement in foreign currency translation reserve (1,540) (9,736)
Other comprehensive loss for the period, net of income tax (12,663) (1,952)
Total comprehensive income for the period 24,937 46,710

Earnings per share

Basic earnings per share 6 5.30c 7.30c
Diluted earnings per share 6
5.30c
7.30c

Total comprehensive income for the period is attributable to the owners of the Group.

The notes to the Interim Financial Statements form an integral part of, and should be read in conjunction with, these Interim
Financial Statements. These Interim Financial Statements should be read in conjunction with the Consolidated Financial
Statements for the year ended 30 June 2023.

P. 6
Consolidated Interim Statement of Changes in Equity

For the six months ended 31 December 2023



Share
Capital
Employee
Benefit
Reserve
Foreign
Currency
Translation
Reserve
Fair
Value
Reserve
Cash Flow
Hedge
Reserve
Retained
Earnings
Total
Equity




$000's Note
Unaudited - December 2023


Balance as at 1 July 2023
800,712 3,581 (8,438) (3,978) 15,075 224,052 1,031,004


Total comprehensive
income for the period




Profit for the period
- - - - - 37,600 37,600
Other comprehensive (loss), net
of income tax

- - (1,540) (40) (11,083) - (12,663)
Total comprehensive (loss)/
income for the period
- - (1,540) (40) (11,083) 37,600 24,937


Contributions by and
distributions to owners




Dividend paid 9
- - - - - (42,579) (42,579)
Share based payments 9
- 631 - - - - 631
Vesting of share based payments 9
765 (765) - - - - -
Share issuance 9
7,283 - - - - - 7,283
Total transactions with owners 8,048 (134) - - - (42,579) (34,665)
Balance as at 31 December 2023 808,760 3,447 (9,978) (4,018) 3,992 219,073 1,021,276

Unaudited - December 2022


Balance as at 1 July 2022
599,185 4,646 (1,635) (1,034) 7,959 199,586 808,707
Total comprehensive
income for the period




Profit for the period
- - - - - 48,662 48,662
Other comprehensive (loss)/gain,
net of income tax

- - (9,736) (752) 8,536 - (1,952)
Total comprehensive (loss)/
income for the period
- - (9,736) (752) 8,536 48,662 46,710


Contributions by and
distributions to owners




Dividends paid 9
- - - - - (32,610) (32,610)
Share based payments
- (263) - - - - (263)
Vesting of share based payments
1,170 (1,170) - - - - -
Share issuance 9
197,006 - - - - - 197,006
Transaction costs associated with
capital raising
9 (3,695) - - - - - (3,695)
Total transactions with owners 194,481 (1,433) - - - (32,610) 160,438
Balance as at 31 December 2022 793,666 3,213 (11,371) (1,786) 16,495 215,638 1,015,855

The notes to the Interim Financial Statements form an integral part of, and should be read in conjunction with, these Interim
Financial Statements
. These Interim Financial Statements should be read in conjunction with the Consolidated Financial
Statements for the year ended 30 June 2023.

P. 7
Consolidated Interim Statement of Financial Position


As at 31 December 2023




Unaudited
December 2023
Audited
June 2023
$000's
Note
Assets
Cash and cash equivalents 286,925 310,286
Investments 12 405,903 330,240
Derivative financial instruments 12 21,526 36,983
Finance receivables measured at amortised cost 7 4,222,679 4,334,214
Finance receivables - reverse mortgages 12 2,632,001 2,403,810
Investment properties 11,903 11,903
Operating lease vehicles 17,547 16,966
Right of use assets 14,924 12,318
Other assets 28,386 26,342
Current tax asset 17,647 1,960
Intangible assets 11 248,224 235,733
Deferred tax asset 22,872 21,105
Total assets 7,930,537 7,741,860

Liabilities
Deposits 8 4,213,768 4,131,025
Other borrowings 8 2,620,690 2,493,510
Derivative financial instruments 12 21,034 7,624
Lease liabilities 17,133 14,287
Tax liabilities - 6,112
Trade and other payables 36,636 58,298
Total liabilities 6,909,261 6,710,856
Net assets 1,021,276 1,031,004

Equity
Share capital 9 808,760 800,712
Retained earnings and other reserves 212,516 230,292
Total equity 1,021,276 1,031,004


The notes to the Interim Financial Statements form an integral part of, and should be read in conjunction with, these
Interim Financial Statements
. These Interim Financial Statements should be read in conjunction with the Consolidated
Financial Statements for the year ended 30 June 2023.

P. 8

Consolidated Interim Statement of Cash Flows

For the six months ended 31 December 2023

Unaudited
6 Months to
December 2023
Unaudited
6 Months to December
2022


$000's
Note
Cash flows from operating activities
Interest received 197,352 155,508
Operating lease income received 2,645 2,197
Lending, credit fees and other income received 4,882 1,516
Operating inflows 204,879 159,221

Interest paid
(158,341)
(88,759)
Payments to suppliers and employees (84,611) (58,118)
Taxation paid (32,494) (38,505)
Operating outflows (275,446) (185,382)

Net cash flows applied to operating activities before changes in
operating assets and liabilities
(70,567) (26,161)

Proceeds from sale of operating lease vehicles 437 1,643
Purchase of operating lease vehicles (2,463) (3,245)
Net movement in finance receivables (14,632) (182,656)
Net movement in deposits 78,428 472,606
Net cash flows (applied to)/from operating activities
1
(8,797) 262,187

Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets (16,715) (7,744)
Proceeds from investment securities 63,159 4,919
Purchase of investment securities (125,000)
-
Deposit paid for the conditional acquisition of Challenger Bank
Limited (CBL)

- (3,936)

Purchase of equity investment
-
(5,667)
Purchase of investment properties - (71)
Purchase of subsidiary, net of cash acquired - (3,047)
Net cash flows applied to investing activities (78,556) (15,546)

Cash flows from financing activities
Proceeds from wholesale funding 659,253 534,065
Repayment of wholesale borrowings (731,228) (739,621)
Proceeds from issue of unsubordinated notes
172,170
87,589
Repayment of unsubordinated notes

(213,166)
Proceeds from issue of subordinated debt - -
Dividends paid 9 (42,579) (32,610)
Payment of lease liabilities (1,206) (1,692)
Net issue of share capital
7,915
193,313
Total cash provided from/(applied to) financing activities 64,325 (172,122)

Net (decrease)/increase in cash held (23,038) 74,519
Effect of exchange rates on cash and cash equivalents (1,540) -
Opening cash and cash equivalents 311,503 310,758
Closing cash and cash equivalents
2
286,925 385,277
1
Cash flows from operating activities do not include cash flows from wholesale funding which are included as part of financing activities.
2
At 31 December 2023, the Group has $129.9 million (2022: $78.1 million) of cash held by structured asset holding entities (Trusts) which
may only be used for the purposes defined in the underlying Trust documents.

P. 9

Consolidated Interim Statement of Cash Flows (Continued)


For the six months ended 31 December 2023



Reconciliation of profit after tax to net cash flows from operating activities




Unaudited
6 Months to
December 2023
Unaudited
6 Months to
December 2022


$000's
Note
Profit for the period 37,600 48,662

Add/(less) non-cash items:
Depreciation and amortisation expense 5,192 5,177
Depreciation on lease vehicles 1,882 1,692
Capitalised net interest income and fee income (93,561) (81,310)
Impaired asset expense 5 25,138 10,557
Investment fair value movement (1,806) 2,449
Deferred tax (1,767) 2,570
Other non-cash items (22,279) 1,324
Total non-cash items (87,201) (57,541)

Add/(less) movements in operating assets and liabilities:
Finance receivables (15,734) (183,973)
Operating lease vehicles (2,463) (1,602)
Other assets (4,833) (3,440)
Current tax (21,799) (18,736)
Derivative financial instruments 28,867 5,696
Deposits 78,428 472,606
Other liabilities (21,662) 515
Total movements in operating assets and liabilities 40,804 271,066


Net cash flows (applied to)/from operating activities
1
(8,797) 262,187
1
Cash flows from operating activities do not include cash flows from wholesale funding which are included as part of financing activities.
The notes to the Interim Financial Statements form an integral part of, and should be read in conjunction with, these
Interim Financial Statements
. These Interim Financial Statements should be read in conjunction with the Consolidated
Financial Statements for the year ended 30 June 2023.

P. 10
Notes to the Interim Financial Statements

For the six months ended 31 December 2023

1 Interim financial statements preparation

Basis of preparation

The Interim Financial Statements presented are the Interim Financial Statements comprising Heartland Group Holdings Limited
(HGH) and its subsidiaries (the Group). They have been prepared in accordance with Generally Accepted Accounting Practice in
New Zealand (NZ GAAP) as defined in the Financial Reporting Act 2013. These Interim Financial Statements comply with NZ IAS 34
Interim Financial Reporting as appropriate for publicly accountable for-profit entities and IAS 34 Interim Financial Reporting.

The Interim Financial Statements do not include all notes of the type normally included in an annual financial report. Accordingly
these Interim Financial Statements should be read in conjunction with the Consolidated Financial Statements for the year ended
30 June 2023.

The Interim Financial Statements presented here are for the six months ended 31 December 2023.

The Interim Financial Statements have been prepared on a going concern and historical cost basis, unless stated otherwise. The
accounting policies adopted are consistent with those of the previous financial year ended 30 June 2023.

Certain comparative balances have been reclassified to align with the presentation used in the current period. These
reclassifications have no impact on the overall financial performance, net assets or cashflows for the comparative period.

Critical accounting estimates and judgements

Provision for impairment on finance receivables measured at amortised cost

The Group’s models for estimating Expected Credit Loss (ECL) for each of its portfolios are based on the historic credit experience
of those portfolios. The models assume that economic conditions remain static over time. If the Group forecasts that economic
conditions may change in the foreseeable future, the Group applies judgement to determine whether the modelled output should
be subject to an economic overlay. Judgement is required to establish clear correlation between key economic indicators and the
credit performance of the Group’s unique portfolios.

As at 31 December 2023, the most significant changes in judgement in respect of the collective provision for impairment are as
follows:

x Motor vehicles lending: The Group has additional provisioning resulting from changes in assumptions in respect of
customer cure rates for exposures in default due to changing patterns of customer behaviour arising from the current
economic conditions (this is the rate of loans in default which the Group expects to return to performing), and loan
write-off rates for certain cohorts of stressed loans as a result of recent changes in customer collectability
experience. The collective ECL on motor vehicle lending for Corporate and Other Exposures was $25.3 million as at 31
December 2023 (30 June 2023: $15.1 million).
x Economic overlay: The Group has developed a new approach to multiple forward looking economic scenarios through
estimating future loss distributions.

Goodwill - StockCo Australia: Please refer to note 11 – Intangible assets for further details.

There have been no other material changes to the use of estimates and judgements for the preparation of the Interim Financial
Statements since the reporting date of the previous financial statements. The Group’s Financial Statements for the year ended 30
June 2023 contains detail on other estimates and judgements used.

Climate Related Disclosures

Effective 1 January 2023, Climate Related Disclosures (CRD) become mandatory for climate reporting entities (CRE). The Group is
a CRE and the Group’s framework for considering requirements to enable CRD has been completed. The Group will issue CRD in
line with the Aotearoa New Zealand Climate Standards for the financial year ending 30 June 2024.

P. 11
Performance

2 Segmental analysis

Segment information is presented in respect of the Group's operating segments consistent with those used for the Group's
management and internal reporting structure.

An operating segment is a component of an entity in business activities and whose operating results are regularly reviewed by the
Group’s Chief Operating Decision Maker (CODM). The CODM, who is responsible for allocating resources and assessing
performance of the Group, has been identified as the Group’s Chief Executive Officer (CEO) and direct reports.

The Group operates within New Zealand and Australia and comprises the following main operating segments:

Operating segments – New Zealand

Motor Motor vehicle finance.

Reverse mortgages Reverse mortgage lending.

Personal lending Transactional, home loans and personal loans to individuals.

Business Term debt, plant and equipment finance, commercial mortgage lending and working capital solutions for
small-to-medium sized businesses.

Rural Specialist financial services to the farming sector primarily offering livestock finance, rural mortgage
lending, seasonal and working capital financing, as well as leasing solutions to farmers
in New Zealand.

Operating segments – Australia

StockCo Australia Livestock finance within Australia.

Australia Reverse mortgage lending and other financial services within Australia.

All other segments

Other Operating expenses, such as premises, IT and support centre costs are not allocated to operating
segments and are included in Other. These are primarily in relation to the New Zealand business.

Finance receivables are allocated across the operating segments. Other assets and liabilities are managed centrally and therefore
are not
allocated across the operating segments. The Group does not rely on any single major customer for its revenue base.

P. 12
2 Segmental analysis (continued)







Reverse Personal StockCo
$000's
Motor Mortgages Lending Business Rural Australia Australia Other Total
Unaudited - December 2023
Net interest income 29,531 22,534 2,948 32,101 17,012 8,199 26,420 3 138,748
Lending and credit fee income 1,413 1,314 72 1,335 154 - 1,618 - 5,906
Net other income/(expense) 644 - 486 452 (415) - - (4,574) (3,407)
Net operating
income/(expense)
31,588 23,848 3,506 33,888 16,751 8,199 28,038 (4,571) 141,247
Operating expenses 2,067 2,549 3,486 4,624 1,663 4,308 6,903 40,898 66,498
Profit/(loss) before fair value
gain/(loss) on investments,
impaired asset expense and
income tax

29,521 21,299 20 29,264 15,088 3,891 21,135 (45,469) 74,749
Fair value gain on investments - - - - - - - 1,862 1,862
Impaired asset expense 15,327 - 615 7,888 118 66 22 - 24,036
Profit/(loss) before income tax 14,194 21,299 (595) 21,376 14,970 3,825 21,113 (43,607) 52,575
Income tax expense - - - - - - - 14,975 14,975
Profit/(loss) for the period 14,194 21,299 (595) 21,376 14,970 3,825 21,113 (58,582) 37,600
Reverse Personal StockCo
$000's
Motor Mortgages Lending Business Rural Australia Australia Other
Total
Unaudited - December 2022
Net interest income 30,936 19,058 5,284 35,843 16,612 13,413 20,526 (2,769) 138,903
Lending and credit fee income 1,037 1,444 43 1,142 137 - 2,593 - 6,396
Net other income/(expense) 697 - 552 400 199 2 0 (2,981) (1,131)
Net operating income
32,670 20,502 5,879 37,385 16,948 13,415 23,120 (5,750) 144,168
Operating expenses 2,055 2,585 3,344 4,867 1,628 4,566 6,473 37,932 63,450
Profit/(loss) before fair value
gain/(loss) on investments,
impaired asset expense and
income tax

30,615 17,917 2,535 32,518 15,320 8,849 16,647 (43,682) 80,718
Fair value (loss) on investments - - - - - - - (2,449) (2,449)
Impaired asset expense 3,341 - 1,580 4,092 162 39 26 - 9,240
Profit/(loss) before income tax 27,274 17,917 955 28,426 15,158 8,810 16,621 (46,131) 69,029
Income tax (benefit)/expense - - - - - (11) - 20,378 20,367
Profit/(loss) for the period 27,274 17,917 955 28,426 15,158 8,821 16,621 (66,509) 48,662
Unaudited - December 2023
Total assets 1,604,893 972,484 357,626 1,323,638 676,193 295,654 1,662,621 1,037,428 7,930,537
Total liabilities 6,909,261
Audited - June 2023
Total assets 1,563,939 888,600 358,572 1,356,913 712,596 374,193 1,520,437 966,610 7,741,860
Total liabilities 6,710,856

P. 13
3 Net interest income

Unaudited Unaudited

6 Months to 6 Months to
$000's
December 2023 December 2022
Interest income
Cash and cash equivalents
6,367 3,525
Investments
5,235 2,399
Finance receivables measured at amortised cost
189,217 156,707
Finance receivables - reverse mortgages
118,703 78,085
Total interest income
1
319,522 240,716


Interest expense

Deposits
110,232 58,667
Other borrowings
84,558 50,374
Net interest (income) on derivative financial instruments
(14,016) (7,228)
Total interest expense
2
180,774 101,813


Net interest income 138,748 138,903
1
Cash and cash equivalents and Finance receivables are measured at amortised cost. Investments are measured at fair value through other
comprehensive income (FVOCI). Total interest income derived from these financial assets is calculated using the effective interest rate method.
Finance receivables
- reverse mortgages are measured at fair value through profit or loss (FVTPL).
2
Deposits and Other borrowings are measured at amortised cost, therefore interest expense incurred on these financial liabilities is calculated
using the effective interest rate method. Net interest expense on derivative financial instruments is not calculated using the effective interest
rate method as they are measured at FVTPL.



4 Operating expenses

Unaudited Unaudited
6 Months to 6 Months to
$000's December 2023 December 2022
Personnel expenses
1
33,064 33,682
Directors' fees
635 574
Superannuation
987 952
Depreciation - property, plant and equipment
963 948
Legal and professional fees
2

2,694 2,400
Advertising and public relations
1,537 1,785
Depreciation - right of use asset
1,444 1,278
Technology services
5,958 4,940
Telecommunications, stationery and postage
983 1,011
Customer administration costs
5,022 5,009
Customer onboarding costs
1,354 1,398
Occupancy costs
1,254 892
Amortisation of intangible assets
2,785 2,951
Other operating expenses
7,818 5,630
Total operating expenses 66,498 63,450
1
Excludes certain personnel expenses directly incurred in acquiring and developing software also capitalised as part of specific application
software as well as those directly attributable to the application for the Banking Licence in Australia. Refer to Note 11 – Intangible assets for
further details.

2
Legal and professional fees include compensation of auditor.

P. 14
5 Impaired asset expense

Unaudited Unaudited
6 Months to 6 Months to
$000's December 2023 December 2022
Individually impaired asset expense 5,390 5,447
Collectively impaired asset expense
19,748 5,110
Total impaired asset expense excluding recovery of amounts previously
written off to the income statement
25,138 10,557
Recovery of amounts previously written off to the income statement (1,102) (1,317)
Total impaired asset expense 24,036 9,240




6 Earnings per share


Earnings
Per Share
Net Profit
After Tax
Weighted
Average No.
of Shares


Cents $000's 000's
Unaudited - December 2023
Basic earnings
5.30 37,600 713,414
Diluted earnings
5.30 37,600 713,414
Unaudited - December 2022

Basic earnings
7.30 48,662 666,186
Diluted earnings
7.30 48,662 666,186

P. 15
Financial Position

7 Finance receivables measured at amortised cost

Unaudited Audited
$000's
December 2023 June 2023
Gross finance receivables measured at amortised cost 4,292,185 4,387,480
Less provision for impairment
(69,506) (53,266)
Net finance receivables measured at amortised cost
4,222,679 4,334,214



(a) Movement in provision for impairment

The following table details the movement from the opening balance to the closing balance of the provision for impairment.


Collectively Assessed Individually
$000's Stage 1 Stage 2 Stage 3 Assessed Total
Unaudited - December 2023

Impairment allowance as at 30 June 2023 13,009 2,463 21,499 16,295 53,266
Changes in loss allowance
Transfer between stages
1
(367) (1,860) 1,891 336 -
New and increased provision (net of provision releases)
1

(1,170) 3,314 17,940
5,054
25,138
Total impaired asset expense excluding recovery of
amounts previously written off to the income statement
(1,537) 1,454 19,831 5,390 25,138

Write-offs

- - (8,898) - (8,898)
Impairment allowance as at 31 December 2023 11,472 3,917 32,432 21,685 69,506

Audited - 30 June 2023

Impairment allowance as at 30 June 2022 20,256 1,958 14,602 15,189 52,005
Changes in loss allowance
Transfer between stages
1
(8,226) (3,864) 3,758 8,332 -
New and increased provision (net of provision releases)
1
983 4,369 15,774 4,678 25,804
Total impaired asset expense excluding recovery of
amounts previously written off to the income statement
(7,243) 505 19,532 13,010 25,804
Write-offs

- - (12,612) (11,904) (24,516)
Effect of changes in foreign exchange rate (4) - (23) - (27)
Impairment allowance as at 30 June 2023 13,009 2,463 21,499 16,295 53,266
1
The increase in provision when a loan moves to a higher stage is included in new and increased provision (net of provision releases) in the
higher stage to which the loan moved. The decrease in provision when a loan moves to a lower stage is included in new and increased provision
(net of provision releases) in the higher stage from which the loan moved.

P. 16
7 Finance receivables measured at amortised cost (continued)

(b) Impact of changes in gross finance receivables held at amortised cost on allowance for ECL


Collectively Assessed Individually
$000's
Stage 1 Stage 2 Stage 3 Assessed Total
Unaudited - December 2023

Gross finance receivables as at 30 June 2023 4,070,598 182,470 81,294 53,118 4,387,480
Transfer between stages (174,292) 75,754 81,905 16,633 -
Additions 674,961 - - 10,667 685,628
Deletions (677,703) (54,130) (35,169) (4,123) (771,125)
Write-offs (156) (274) (8,792) (576) (9,798)
Gross finance receivables as at 31 December 2023 3,893,408 203,820 119,238 75,719 4,292,185
Audited - June 2023

Gross finance receivables as at 30 June 2022 3,967,917 118,424 46,114 66,371 4,198,826
Transfer between stages (237,955) 161,605 64,627 11,723 -
Additions 1,412,648 - - 9,326 1,421,974
Deletions (1,072,012) (97,559) (17,068) (15,194) (1,201,833)
Write-offs - - (12,379) (19,108) (31,487)
Gross finance receivables as at 30 June 2023 4,070,598 182,470 81,294 53,118 4,387,480


Impact of changes in gross exposures on loss allowances

The Group’s provision for impairment has increased by $16.2 million during the period due to:

x A net increase in collective provisions of $10.8 million due to increase in stage 3 receivables, increase in provisions made
against motor vehicles lending from changes in motor vehicles lending assumptions in respect of cure rates and loan
write-off rates, as well as a new economic overlay due to the new methodology in estimating future loss distributions.

x A net increase in individually assessed provisions of $5.4 million due to additional provisions required on various legacy
single named exposures as a result of changes in the estimated recoverable amounts driven by the deterioration of
economic conditions.

P. 17
8 Borrowings

Unaudited Audited
$000's December 2023 June 2023
Deposits 4,213,768 4,131,025
Total deposits 4,213,768 4,131,025

Unsubordinated notes 554,374 382,617
Subordinated notes 100,291
97,794
Securitised borrowings 1,817,525 1,713,737
Certificate of deposit 148,259 148,110
Bank borrowings 241 131,248
Money market borrowings - 20,004
Total other borrowings 2,620,690 2,493,510
Total deposits and other borrowings 6,834,458 6,624,535


Deposits and unsubordinated notes rank equally and are unsecured.

Movement in other borrowings

Unaudited Audited
$000's December 2023 June 2023
Opening Balance 2,493,510 2,578,213

Issue of debt 831,423 1,449,882
Repayment of Debt (731,228) (1,538,592)
Total Cash Movements 100,195 (88,710)

Capitalised interest and fee expense 23,308 34,809
Fair Value Movements 4,777 (473)
Foreign exchange and other movements (1,100) (30,329)
Total non-cash movements 26,985 4007
Closing Balance 2,620,690
2,493,510

Unsubordinated notes

During the period, the Group issued AU $50 million medium term notes (MTN’s) on 18 December 2023 maturing on 5 October
2027, and AU $105 million MTN on 20 December 2023 maturing on 13 May 2025. The funds received were used to repay bank
borrowings.

Securitised borrowings

On 15 September 2023, Heartland Auto Receivable Warehouse Trust 2018-1 (HARWT) increased its motor vehicle facility by $100
million, taking the total facility limit from $400 million to $500 million. The maturity date was extended to 26 August 2025.

On 25 September 2023, Seniors Warehouse Trust 2 (SWT2) reverse mortgage facility was increased by AU $100 million taking the
total Class A limit to AU $550 million. On 22 December 2023, there was a further AU $100 million increase to SWT2 increasing the
total facility limit from AU $550 million to AU $650 million.

P. 18
9 Share capital and dividends

Unaudited Audited
December 2023 June 2023
000's Number of Shares Number of Shares
Issued shares
Opening balance 709,658 592,904
Shares issued during the period 1,275 112,417
Dividend reinvestment plan 4,791 4,337
Closing balance 715,724 709,658


On 19 September 2023, HGH issued a further 1,275,194 shares under the Long Term Incentive Scheme of HGH (LTI Scheme), of
which 459,070 shares were acquired by HGH pursuant to the buyback offer to the participants in order to fund the tax liability
that arose for those participants upon receipt of shares under the LTI Scheme.

The Group issued 4,790,946 new shares at $1.6865 per share ($8.0 million) on 22 September 2023 under the dividend
reinvestment plan (DRP) for the period (June 2023: 4,336,812 new shares at $1.6370 per share ($7.1 million)) on 23 March 2023
under the DRP for the period).

The ordinary shares have no par value. Each ordinary share of HGH carries the right to vote on a poll at meetings of shareholders,
the right to an equal share in dividends and the right to an equal share in the distribution of the surplus assets of HGH in the event
of liquidation.

Dividends paid

6 Months to December 2023 12 Months to June 2023
Date Cents Date Cents
Declared Per Share $000's Declared Per Share $000's
Final dividend 26 August 2023 5.5 42,579 24 August 2022 5.5 32,610
Interim dividend - - - 28 February 2023 5.5 38,792
Total dividends paid 42,579 71,402


10 Related party transactions and balances


(a) Transactions with related parties

HGH is the ultimate parent company of the Group.

Related party transactions between the Group eliminate on consolidation. Related party transactions outside of the Group are as
follows:

Unaudited Unaudited
6 Months to 6 Months to
$000's December 2023 December 2022
ASF Custodians Pty Limited
Audit fees
2 4


Heartland Trust (HT)
Dividend paid to HT 390 356


HT held 6,504,266 shares in HGH (December 2022: 6,504,266 shares).

The Trustees of HT and certain employees of the Group provided their time and skills to the oversight and operation of HT at no
charge.

P. 19
11 Intangible assets

Unaudited Audited
$000's December 2023 June 2023

Computer software
Software - cost 50,646 48,513
Software under development 39,182 28,391
Accumulated amortisation 34,317 31,944
Net carrying value of computer software 55,511 44,960

Goodwill 183,563 184,422
Net carrying value of goodwill 183,563 184,422

Other intangible assets
1
9,150 6,351
Total intangible assets 248,224 235,733
1
Other intangible assets include capitalised Australian banking licence costs of $9.2 million (June 2023: $6.4 million)

Australian Banking Licence

On 20 October 2022 Heartland Group Holdings Limited entered into a conditional share sale agreement with Challenger Limited
to acquire 100% of the shares of CBL, holder of a full Australian Authorised Deposit-Taking Institution (ADI) Licence. HGH and CBL
have jointly applied to the Australian Prudential Regulatory Authority (APRA) for approval to expand the range of products CBL
offers and to amend CBL’s APRA approved business plan to integrate with HGH’s existing Australian based financial services
business.

Costs directly attributable to the application are recognised as a Banking licence intangible asset. On completion, the Banking
Licence is expected to have an indefinite life as there is no foreseeable limit to the period over which the asset is expected to
generate benefits for the business.

Goodwill

For the purposes of impairment testing, goodwill is allocated to cash generating units. A Cash Generating Unit (CGU) is the
smallest identifiable group of assets that generate independent cash inflows. Group has assessed that goodwill should be
allocated to the smallest identifiable CGU:

x Heartland Australia Holdings Pty Limited: $15.3 million (June 2023: $15.3 million).
x Heartland Bank Limited: $29.8 million (June 2023: $29.8 million).
x StockCo Australia: $138.4 million (June 2023: $139.3 million).

Heartland Bank Limited (HBL) and Heartland Australia Holdings Pty Limited (HAH)

There was no indication of impairment and no impairment losses have been recognised against the carrying amount of goodwill
for the six months ended 31 December 2023 (June 2023: nil).

P. 20
11 Intangible assets (continued)

StockCo Australia

During the period adverse weather conditions and drought concerns continued to negatively impact livestock prices. Demand for
livestock financing has been affected given many producers have destocked, consolidated debt from selling livestock at lower
rates, or retained livestock for longer periods to gain weight and recoup value. This resulted in growth challenges and compressed
net interest margins.


While the risk of drought has reduced and livestock prices have subsequently improved, a stress test was conducted on the
recoverable amount previously determined at 30 June 2023 on a fair value less cost to sell basis using a discounted cash flow
methodology. The receivables growth assumption was reduced and the cost of funds assumption was updated based on the
forward curve for bank bill rates as at 31 December 2023. All other key assumptions and drivers from the annual impairment test
remained appropriate. There remains headroom as at 31 December 2023 and no impairment of the StockCo Australia CGU was
recognised. A change to any one of the key drivers noted below based on the stress test would result in a break-even position
with no remaining headroom.


Key driver Sensitivity over the forecast cash flow period to break-even as at 31 December 2023
Lending growth A permanent decrease of A$21.0 million in gross receivable balances over the forecast cash flow period.
Interest yield A permanent decrease of 0.8100% over the forecast cash flow period.
Cost of funds A permanent increase of 0.2317% over the forecast cash flow period.

A combination of changes to key drivers noted above may also lead in a break-even position with no remaining headroom.

P. 21
12 Fair value

(a) Financial instruments measured at fair value

The following methods and assumptions were used to estimate the fair value of each class of financial asset and liability measured
at fair value on a recurring basis in the Consolidated Statement of Financial Position.

The Group has an established framework governing performing valuations required for financial reporting purposes including
Level 3 fair values. The Group regularly reviews and calibrates significant unobservable inputs and valuation adjustments in
accordance with market participants’ views. If external valuation specialists are engaged to measure fair values, the Group
assesses the evidence obtained from these specialists to support the conclusion of these valuations. All material valuations are
reported to the Group's Board Audit and Risk Committee prior to adoption in the financial statements.

Investments in debt securities

Investments in public sector securities and corporate bonds are stated at fair value through other comprehensive income
(FVOCI),
with the fair value being based on quoted market prices (Level 1 under the fair value hierarchy) or modelled using observable
market inputs (Level 2 under the fair value hierarchy).

Investments valued under Level 2 of the fair value hierarchy are modelled either based on quoted market prices or dealer quotes
for similar instruments, or discounted cash flows analysis.

Investments in equity securities

Investments in equity securities are classified as fair value through profit or loss (FVTPL) unless an irrevocable election is made by
the Group to measure at FVOCI.

Equity securities are measured at FVOCI where they are not held for trading, the Group doesn't have control or significant
influence over the investee and where an irrevocable election is made to measure them at FVOCI. These securities are measured
at fair value with unrealised gains and losses recognised in other comprehensive income except for dividend income which is
recognised in profit or loss.

Investment in listed securities traded in liquid, active markets where prices are readily observable are measured under Level 1 of
the fair value hierarchy with no modelling or assumptions used in the valuation. Investments in unlisted equity securities are
measured under Level 3 of the fair value hierarchy with the fair value being based on unobservable inputs using market accepted
valuation techniques.

Where appropriate, the Group may apply adjustments to the above-mentioned techniques to determine fair value of an equity
security to reflect the underlying characteristics. These adjustments are reflective of market participant considerations in valuing
the said security.

The Group has irrevocably elected to account for certain equity investments at fair value through other comprehensive income.
These are Level 3 investments and were valued using outcomes from capital raises last completed and calibrated against
market multiples as at 31 December 2023.