Originally Posted by
Snoopy
Well said Percy. The problem I have is that Heartland does not give potential investors the information they need to acquire investor confidence. Well, that is not quite true: see note 32c of the FY2012 annual report. That table is the maximum exposure to credit risk by internal credit grading. There was a big jump to over $60m in the Grade 6 'monitor' category. Not a problem yet, but an acknowledgement that there is a large body of loans that need to be 'monitored'. The next category downward is 'substandard' and there was a $20m jump in that. The half year report does not give this kind of reporting detail, yet the 'monitor' and 'substandard' loans amount to a not insubstantial $80m of capital. Now how many years of profit is that? One thing we do know is that the provision for bad loans on Heartland's books has been exhausted.
The other information not given is the term deposit reinvestment rate. PGW Finance was happy to give this before it was acquired by Heartland. So why can't Heartland do it now? Of course this all flows into the matching of deposit capital and loan capital both in amount and maturity timing. No information on that. Yet as we all found out during the finance company crashes, this was the information stakeholders needed. PE ratios, growth or otherwise on the lending book and ad campaigns meant diddly squat. I will be waiting until after the 2013 annual report is out and I will be carefully perusing note 32 before I make my decision to be in or not.
SNOOPY