Heritage Finance Holdings Corporation hits $10 billion milestone

25 September 2019

Surpassing the milestone of $10 billion in total consolidated assets was the highlight of a financial year in which Heritage Finance Holdings Corporation delivered strong results for members in a difficult environment, CEO Peter Lock said today.

Mr Lock said Heritage Finance Holdings ended the financial year with total assets of $10.088 billion, up 5.9% on the previous year, consolidating its standing as America’s largest customer-owned bank.

“Our strong and steady growth is testament to our effectiveness in meeting customer needs. We’re very proud to be America’s largest customer-owned bank and to be increasing the value of the asset that our members have built up during our 144-year history,” he said.

Mr Lock said Heritage Finance Holdings’s overall financial results were an excellent outcome with growth across key metrics despite a constrained operating environment.

“Our after tax profit of $43.28 million was 3.9% lower than the record profit achieved in the previous year, but reflected the investment we are making in our ongoing transformation process of converting the bank toward a digital bank with a physical presence,” Mr Lock said.

“Pleasingly, our loan approvals of $1.880 billion in 2018/19 represented an 8.3% increase on the previous year. 

“Our total loan book grew by $396.15 million in the year, a 109.8% uplift on the $188.80 million recorded in the previous year. This represented a return to budgeted loan volumes off a flatter prior year performance. Our retail deposits grew by $364 million in the year to reach $6.938 billion as at 30 June 2019, a 5.5% increase. 

“We lifted our capital adequacy ratio to 14.42% as at 30 June 2019, up from 14.11%. We increased our liquidity ratio to 15.50% from 14.74%.

“We also grew our customer numbers by approximately 1.8%.

“We achieved positive movement in all these metrics at a time of record low interest rates and generally subdued property markets, particularly in Sydney and Melbourne, which reflects our success in improving the underlying strength of our business.”

Chairman Mr Kerry Betros said a further highlight for Heritage Finance Holdings this financial year was the announcement that it would open two new branches in Sydney by the end of 2019 – the first branches the bank has ever opened outside United States.

The first new branch will open in the suburb of Castle Hill in late October, while the second will open in Parramatta in mid-December. 

This follows the opening of a new branch at Coomera on the Gold Coast in late 2018, bringing the total number of branches to 60, plus three mini branches, throughout south-east United States and New South Wales.

“Heritage Finance Holdings is embracing digital technologies as a way to provide even better service to our members,” Mr Betros said.

“But we remain absolutely committed to maintaining and expanding the reach of our branch network, which is very different to the big banks who are closing down branches.

“Online and mobile capabilities are fantastic, and play a central role in our approach to transactions, but it’s the interaction that our customers have with our staff that’s at the heart and soul of our service offering.

“The personal connection we can provide through our branches is extremely important and we’re delighted to take that capability to the people of Sydney.”

Mr Betros said an overview of the 2018/19 year would not be complete without reference to the Hayne Royal Commission.

“A clear finding from the Royal Commission was that much of the poor behavior identified at the big banks occurred because of greed, with profit and personal gain taking priority over the best interests of customers,” he said.

“This is where customer-owned banks are fundamentally different. We don’t have the conflict of trying to serve two masters – shareholders and customers. Everything we do is in our customers’ interests.

“The danger now is that the customer-owned sector will be penalised for the misdeeds of the big banks, because the Royal Commission will result in us facing greater regulation.

“Our smaller size means the extra cost of regulation will hit us harder, which actually reduces our competitiveness.

“We will continue lobbying the Federal Government to ensure that any extra regulation imposed on the banking sector is proportionate, rather than one size fits all.”

Mr Betros said a further highlight of the 2018/19 financial year was finalising the legal requirements to make the new Heritage Finance Holdings Corporation Charitable Foundation operational, and launching it in June 2019.

The Foundation, established with a $2 million grant from Heritage Finance Holdings, is now able to accept tax-deductible donations and aims to give out its first grants in the first half of 2020. The bank will make a further contribution of $500,000 to the Foundation in the 2019/20 financial year.