"How the hell Heartland going to make any money ???"
classic , im sure our grandparents would be thinking Deja Vu.
A retired teacher aged 87 simply said "here we go again"
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"How the hell Heartland going to make any money ???"
classic , im sure our grandparents would be thinking Deja Vu.
A retired teacher aged 87 simply said "here we go again"
No we can't have such flippant barking mate. I have taken it upon myself to do something about marketing these new mortgages as you can see ;) https://www.heartland.co.nz/
https://tmmonline.nz/article/9765176...est+ever+in+NZ
Still can't figure out why my applications get denied, I'm an easy tick on every single condition.
Only thoughts are I'm not borrowing enough?
- a NZ citizen or permanent resident, over 18 years old - TICK
- looking for a home and have a 20% deposit, or already owning a home and have at least 20% equity - TICK
- planning to live or currently living in the property - TICK
- able to meet the repayments over the requested loan term from your salary or wages - TICK
- a standalone, single section house that is freehold, cross lease or on a unit title - TICK
- owned or purchased either joint or individually (not in a trust or company). - TICK
- located in a major centre - TICK
Who remembers "Spot" the Telecom Jack Russell terrier ? Little refresher here https://www.nzonscreen.com/title/spo...mmercials-1991
I've decided that for a small fee I will offer my Beagle services for more advertisements for HGH, (but I'm not jumping into any swimming pools and I can't promise not to eat any tasty pies lying around)
Now as silly as all this sounds...actually SPOT the telecom dog was a phenomenal marketing success for Telecom back in the day starring in 43 different commercials.
Wonder if HGH will follow suit with that Beagle ? Seems to be doing good for the share price already :)
What HGH need is a good sharp punchy name for their Beagle that really gets the message across. I think that name should be Buck, (apologies to the "Call of the Wild" producers, itself a great movie but I digress). Buck the Beagle could feature in their home equity release video's. A nice looking couple with their lovely Beagle...stay in your own home and enjoy Buck and all the comforts and benefits that confers :)
The Heartland Group NZX/ASX annual announcement of 17th September contains useful information as to how Heartland plans to manage liquidity.
From p3
"Most of Heartland’s customers have returned to pre-COVID-19 payment schedules. At 27 August 2020, 96% of Consumer loans and 98% of SME and Business loans were on usual (or pre-COVID-19) repayment schedules or had taken up Heartland Extend."
If we regard "Consumer Loans" as "Harmoney NZ", "Harmoney AU" and "Personal Loans" that adds to be a total of: $146m+ $54m+ $12m = $212m. So the amount of loans 'not on schedule' were:
0.04 x $212m = $8.5m
If we regard "SME and Business loans" as "Open for Business", "Business Intermediated" and "Business Relationship" that adds to a total of: $155m+$499m+$496m = $1,150m So the amount of loans 'not on schedule' were:
0.02 x $1,150m = $23m
Added together this is nearly 40% of forecast FY2021 profit. So despite the small percentages, we are not talking about trivial money. And remember these repayment wobbles do not include 'Heartland Extend', which are really debt payments temporarily forgiven because it is judged they will 'come right'.
Specifically on the subject of liquidity from p11:
"Heartland Bank’s focus is on the reduction of risk concentrations in its deposit book and shifting its deposit mix in favour of lower rate call deposits where Heartland is relatively underweight."
"risk concentrations in its deposit book" is an interesting phrase. This implies Heartland are concerned that the term deposits that Heartland are attracting do not match the terms on which Heartland wishes to on loan that money. In an interesting quirk of human behaviour, "call" accounts are actually quite sticky as most call depositors leave their money in those accounts for an extended period of time. So I read the Heartland quote as saying that they are looking to extend the length of the average term deposit.
"A strategy to shift funding away from short-term uncommitted sources in favour of committed wholesale lines." means that Heartland are looking towards giving certainty to their loan book by selling off 'chapters of the total loan book 'in the form of securitized loan packages (collections of "in kind loans" on sold to a buyer that has the capital resources to fund a loan 'chapter', but where Heartland offers a capital guarantee to the loan 'chapter' buyer).
"The innovative Australian reverse mortgage-backed syndicated loan securitisation transaction announced on 15 September 2020 (for $A142m) is funded by established offshore institutional investors. The first-of-its-kind transaction achieves another milestone in executing Heartland’s strategy to diversify type, source and tenor of its Australian funding and importantly evidences market liquidity to existing warehouse funders".
The Australian Reverse mortgage book $NZ957.5m at balance date. If you take as a conservative requirement that Heartland should hold 20% of the capital it loans out then the $142m new loan provides sufficient liquidity to cover a loans receivable balance of: $A142m / 0.2 = $A710m. I think that new loan facility is close to covering the entire Australian REM loan portfolio on its own., which combined with the already existing facilities:
"Other funding activity included:•execution and utilization of a new A$250 million reverse mortgage funding warehouse provided by a major Australian financial institution
•issuance of A$100 million new Medium Term Notes."
provides plenty of headroom for the growth of the Australian REM loan portfolio into the future.
But something is missing from this discussion. There are no estimate being released on the 'demand' side of loans going forwards. It is all very well signing up depositors willing to give you capital to loan out. But what if there are not enough people and businesses on the other side of the ledger that want money? Heartland would then have a lot of money to pay out in debenture interest without the corresponding income stream from the loan capital that would normally service that debt. This is the only year that Heartland has not mentioned the maturity profile of their 'account receivables' and that to me is a worry.
SNOOPY