Heartland posted its results for the six months to December, noting a net post-tax profit of $33.1 million, up 6.5% on the same period the previous year.
The profits were helped by 24.9% annualised growth in its Australian reverse mortgage book, a factor Flood says is down to increasing awareness across the Tasman, and a deeper broker channel. Heartland's New Zealand reverse mortgage book grew by 10.7% over the same period.
"Australia is a more competitive market, and we have been the only player advertising here [in New Zealand] for a while. It also comes down to broker driven-business. Brokers are a bigger part of the Australian market, and retirees are going to them to help solve their problems."
Flood said only a "tiny amount" of New Zealand reverse mortgage business came through advisers, compared to about 70% of its Australian reverse mortgage book. He said this was a clear opportunity for advisers to broaden their product range and have a conversation with retirement age clients. Heartland pays a flat fee of $500 for reverse mortgage referrals, and believes they can help advisers demonstrate their value.
"Unless we're advertising on TV, no-one is advertising this product. Customers may be unaware," he said. "There's a chance for brokers, who can assist their customers with solutions from niche providers like Heartland. There's an opportunity not just to focus on home loans but to meet needs more broadly," he said.
Flood is confident reverse mortgages will continue to grow on both sides of the Tasman. "We're seeing a great need for this product, which can have a great impact on people's lives. The demographics are compelling. A lot of baby-boomers are heading to retirement asset rich and cash poor, and reverse mortgages can be a way of giving people greater comfort than they might otherwise have."
The results come as Heartland completes a reorganisation, separating Heartland Bank from Heartland Group. The move freed up its Australian reverse mortgage book from New Zealand capital requirement rules. Flood becomes CEO of Heartland Bank, with Jeff Greenslade remaining CEO of Heartland Group Holdings.
Like many smaller lenders, Heartland is eyeing business from the major banks which remain under intense regulatory pressure on both sides of the Tasman. "We may see opportunities develop for smaller banks like Heartland, and our message is to brokers is, we are open to that. A lot of people are under banked, and services offered by the market don't meet their needs," Flood said.