Westpac pedestal height reduced too
Quote:
Originally Posted by
Snoopy
I think some of you Heartlanders see ANZ on a pedestal that is higher than it should be. From a bankers perspective the amount available to loan is tied to the amount of 'tier' capital available to be loaned against. In the case of Heartland 'Tier Capital' and shareholders equity are one and the same thing. But the ANZ and the other big banks have other sources of 'Tier capital' not available to Heartland.
Perusing my latest ANZ report (from 2012) page 58 lists total shareholders equity as $41.22 billion.
Now go over to page 117 and you will $752m of US trust securities (currently also Tier 1 capital) and three issues of ANZ convertible preference shares adding up to $5,114m (I believe these currently rank as Tier 2 capital). Perpetual subordinated notes of $953m add more tier 2 capital.
Below that is a list of more subordinated notes. Those maturing five years into the future can be fully regarded as more tier 2 capital amounting to $4,632m. Those maturing in four years time ($582m) need to be discounted 20% to arrive at yet more tier 2 capital of $466m.
As at 30th June 2012 ANZ has $5,114m + $4,632m + $466m = $10.212b of Tier 2 capital. That is less than 50% of the available Tier 1 capital ($41,220m + 752m = $41.972b).
So all of that tier 2 capital is available to be borrowed against.
Summing up all the Tier 1 and Tier 2 capital then, ANZ has $52.184b of Tier 1 and Tier 2 capital to back up their loans.
For FY2012 the ROE based on end of year shareholders equity is:
$6,011m/$41.220m = 14.6%
But if you do the same calculation on tier 1 and tier 2 capital, the Return on 'backing capital' is a rather lower.
$6,011m/$52,184m = 11.5%
That is close to the 10% ROE that Heartland is projected to achieve for FY2013.
The other comparison you Heartlanders like to make is with Westpac. The WBC Annual report for 2013 landed in my mailbox last week. Using the profit from p83, and the balance sheet equity, the Return on Equity figure for Westpac was as follows:
$6.368b / $46.618b = 13.7%
However, as with ANZ Westpac makes their loans dependent on their holding of 'total Tier capital', which includes additional elements to just shareholders equity. On p173 of this report Westpac lists the following additional Tier 1 equity.
$1,177m (Westpac Convertible Preference Shares)
$1,367m (Westpac Capital notes)
$906m (Stapled Preferred Securities)
$616m (Convertible Debentures and Trust Prepared Securities)
Add in the shareholders equity and I get total Tier 1 equity of $50.684b
In addition there is $4.886m of subordinated Tier 2 debt which I have reduced by $270m to take into account the early maturity(less than five years) of some 2015 debt, and to which must be added $378m of Tier 2 subordinated perpetual notes. That amounts to $4.994b of tier two debt in total for calculation purposes.
If you now do the same return calculation on tier 1 and tier 2 capital, the Return on this 'total backing capital' is a rather lower.
$6.368b / ($50.684b + $4.994b) = 11.4%
That is within one decimal point of the ANZ FY2012 figure.
SNOOPY
How to get a mango down from a tree*
Quote:
Originally Posted by
winner69
I think Snoopy is on the verge of saying HNZ is a BUY .... yes a BUY
Better get in quick before the recommendation comes
If it only worth $0.85 and there is no growth then I would not touch it with a very long stick.
Best Wishes
Paper Tiger
*Take a long piece of bamboo and cut down the middle at one end, stick a little wedge in to keep the two halves far enough apart to hold a mango.
Lift bamboo up from underneath until the mango is cradled in the end.
Wiggle it a bit until the mango comes loose from the tree.
Lower bamboo and extract mango.
Another Assertion from a Certain Person SHOT DOWN IN FLAMES
and would you look at that...
They have rebuilt their capital adequacy buffer from 1.76% to 2.45% in a single quarter.
Best Wishes
Paper Tiger