Heartland said the opportunity to grow those existing Australian businesses either as part of a bank or a broader banking group was significant.
"Challenger Bank also affords further opportunities to expand Heartland's best or only products into Australia," it said.
Avenue deal off
In August, Heartland signalled its intentions to apply to become an ADI in Australia. That plan including signing a non-binding memorandum of understanding with Avenue Holdings for the potential acquisition of its banking company, Avenue Bank, buying an 11 per cent shareholding in Avenue for $5m.
Since then, Heartland said market conditions changed and it became aware Challenger Bank was an alternative opportunity. As such, it had ended discussions with Avenue.
Heartland's board assessed Challenger was a stronger acquisition opportunity to achieve its Australian strategy.
"Challenger Bank has also recently undertaken a programme of significant investment to build out its digital capability, which fits with Heartland's digitalisation strategy," Heartland said.
No decision had been made on the future of its shareholding of Avenue Bank.
Business update
Heartland also provided an update on the first quarter of the June 2023 financial year saying it reported growth across its reverse mortgages, motor and asset finance portfolios.
Reverse mortgages in both NZ and Australia maintained strong annualised growth of 24.4 per cent and 19.3 per cent. Heartland said the motor portfolio annualised growth was returning to where it had been before the Credit Contracts and Consumer Finance Act was amended at 7.8 per cent. Asset finance recorded annualised growth of 10.3 per cent.
"Other areas are performing satisfactorily, noting that the Livestock lending season has only just commenced," Heartland said.
- BusinessDesk