Better Heartland than other banks
Quote:
Originally Posted by
Snoopy
Once again there is no mention of Tier 1 or Tier 2 in the Heartland HY2013 report.
The 'best case' scenario is that all loans are Tier 1. $2,097.553m of loans are outstanding. 20% of that figure is:
0.2 x $2,076.968m = $415.4m
Heartland has total equity of $382.5m which is still below the 20% of loan target no matter what the tier classification of the loans.
Result: FAIL TEST
PS I do note that while other posters have protested at my 20% of equity to back up the loan measuring stick in the past, it is not too far away from the 17% which by implication is judged acceptable by management under the watchful eye of Reserve Bank chairman Graeme Wheeler. The reserve bank further qualifies their views that a company of Heartlands credit rating still has a 1 in 30 chance of going broke in any year. I prefer to think in business cycles and 30 years will contain around five of those. So you could restate the Reserve Bank's view as saying that HNZ has a one in five chance of going broke at the bottom of the business cycle. For me that investment risk is too high. So I am sticking to my 20% equity requirement, even if the Reserve Bank will settle for less.
So let us apply this metric of yours to a couple of other financial institutions:
The Heartland figures of $2,076.968 are Liabilities: Borrowings and the $382.5 is total equity (including intangibles :scared:)
ANZ: (Dec-13 Disclosure Statement)
Interest and discount bearing liabilities: $93,757M
Required equity for 20% ratio: $18,751M
Total equity: $11,832M, Ratio only: 12.6%
Westpac: (Dec-13 Disclosure Staement)
Interest and discount bearing liabilities: $61,261M
Required equity for 20% ratio: $12,252M
Total equity: $6,439M, Ratio only: 10.5%
Best Wishes
Paper Tiger
And so to prove that you can prove what you want by using the wrong numbers
Quote:
Originally Posted by
Snoopy
I would take the ratios you have calculated. But instead of comparing them with each other, for each one measure the 'headroom' between the actual figure and the minimum figure that the Reserve Bank of NZ requires for each specific bank under examination.
SNOOPY
So here we go:
|
Tier1&2 a la Snoopy % |
RBNZ Requirement % |
Buffer % |
ANZ |
12.6 |
8 |
4.6 |
WBC |
10.5 |
8 |
2.5 |
HNZ |
18.4 |
12 |
6.4 |
It would seem that HNZ still wins hands down. I have just followed the calculation method and instructions of Snoopy.
Best Wishes
Paper Tiger