Touche; great info thanks bg.
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Touche; great info thanks bg.
Thank you belted galloway.
Confirms we have no reason to be concerned over dairy lending.Dairy lending only makes a part of HNZ's profitable rural lending,and of that dairy lending we would expect it to be livestock,rather than the risky dairy conversion loans.
As always, experienced bankers are making sure they have good security and guarantees in place.
Percy, Heartland can't be perfect
What is the one thing you have a slight concern about, must be something.
Percy, Moody's upgrade Air New Zealand credit rating
Jeez, obviously no 'country risk' in their thinking
Heartland upgrade more likely now?
Yes certainly looking that way.
1]Diversified lending book.
2]Lower funding costs.
3]Secure funding base.[No overseas wholesale funding].
4]Increasing profits.
5]Higher "niche" margins,ie REL loans being 2% higher than standard mortgages,
6]No large exposure to NZ housing market.
I'll bet you a decent dinner and drinks there's no heartland upgrade this year Percy and I'll give you 2:1 odds
Yep BG, it's all there if you look. And if you picked up the phone and spoke to any one of their rural lending people, or even better, one of the Credit Approval team, you'd find out it's all fairly straight-forward. First charge on the actual asset (which might get them 40% in a fire-sale), then tackle the owner via PG's, which would usually include a GSA over other assets (boats, jet ski's, holiday houses etc), plus sometimes specific security over assets such as their own home (usually 2nd or 3rd Mortgage)Quote:
belted galloway astutely pointed to the facts:
Also regarding security:
"Although the Group relies primarily on the integrity of borrowers and their ability to make contracted repayments, the Group also requires appropriate collateral for loans. This collateral is usually by way of first charge over the asset financed and usually includes personal guarantees from borrowers and business owners."
At the end of the day, banks are there to support businesses through the cycles, not to bankrupt them at the first sign of cash-flow problems
percy, I side with roger re credit ratings to the extent they are unlikely to get an upgrade in the current environment, so would sub-underwrite rogers 2 to 1 for him if you wanted to take up his side-bet.
Having said that, my opinion of rating agencies is well documented, and I think the market holds the same sanguine view. It only possibly matters and has some immediate effect when a rating transitions to or from investment grade. That causes the funds to make moves in or out, but I don't think the general public gives a monkeys toss
Thanks Xerof.
I am more than happy that RBNZ reduced HNZ's capital requirements,so am unconcerned whether Fitch's upgrade or not.
Although..........The statement HNZ were "assessing capital management options" would not have been made without thought of Fitch's view/reaction/consultation.