Yet Heartland Bank survived and went from strength to strength.
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Well....they certainly had a great run up until about this time last year. $1.41 was the peak about 12 months ago if I remember correctly. Looking at Winners chart, WMP was aro9und $3.200 a ton a year ago..looking at just over half that now so it can't be dairy farmers that are buying your books Percy.
Westpac economists now see milk price of just $4.60 in 2017 as another fall in dairy prices looms in this week's auction
http://www.interest.co.nz/rural-news...y-prices-looms
More opportunity for Heartland to do a bit more lending in this sector if Westpac believe their forecast and cut back on dairy lending
Ouch - 3 years in a row of low farm gate prices
The real worry is they've now badly over estimated next season's price twice in a row. Here's what they were forecasting last year http://www.interest.co.nz/rural-news...on-after-sixth $5.20 - $5.75 And the final result maybe $1.50 - $2.00 kg shy of that around as little as $3.75. What next year's price will really be is anyone's guess at this very early stage of the game. With Fonterra's track record of forecasting in the last two years I honestly don't see any point in them issuing a forecast at all. We also now know today that all this is entirely relevant to HBL as there's a strong correlation between HBL's SP and the WMP GDT auction price.
Its not just price it is also volume, NZ Inc. WMP market share has fallen back in China - we have lost 10% of the China market in the past 12 months, lost entirely to the EU.
If you need forex for investments or play well worth getting into a good position.
The conern voiced about Heartlands rural exposure is surely over agitated
The provincial accountant who sits on the board of directors would have cut his teeth in the trade during the era of Supplimentary Minimum Payments and the havoc wrought on the rural sector by Rodgernomics.
He would have cautioned his fellow directors the winds of change in farming often blow with the ferocity of a Canterbury Nor-wester.
His fellow directors despite being latte sipping Dorklanders would have recognised the credibility of his concerns and acted with prudence.
Boop boop de do
Marilyn
Heartland says "Key drivers of growth for Heartland are GDP and employment"
Great news then -
@ANZ_cambagrie: Good Q4 retail sales. Volume up 1.2% qpc, core 1.4%. Value 1.2% qpc. Housing and tourism related industries led. Economy still rolling along
That really depends on what you choose as your measuring stick Winner. If you compare the annual impairment expense with Earnings Before Tax (with the impairment added back into that), a rather different picture emerges.
Now compare the above Heartland table with the equivalent table for UDC
UDC Annual Impaired Asset Expense (A) Total Impaired Asset Provision (B) (A)/(B) Net Receivables (impairment included) (B)/(C) EBT (before impaired asset exposure) (A)/(D) 2012 $6.031m $38.481m 16% $2,052.954m 1.9% $58.476m 10% 2013 $7.123m $37.460m 19% $2,102.577m 1.8% $66.787 11% 2014 $11.733m $31.805m 37% $2,303.386m 1.4% $83.501m 14% 2015 $10.427m $31.529m 33% $2,378.692m 1.3% $89.750m 12%
You have to regard the FY2013 figures for Heartland as an outlier. This is because the 'non core legacy property portfolio was brought (and bought! {from PGC}) onto the books.
The impairment to earnings ratio for the last couple of years has been not so different. However the 'total impaired provision', a defacto balance sheet item (as noted in the financial recievables break down of each company), is consistently less at Heartland in comparison with UDC.
However the annual impairment charge verses total impairment value in balance sheet terms ( A/B ) is generally greater at Heartland. This is consistent with Heartland underestimating their impairments over the years. IOW the judgement of the Heartland team when evaluating loans is not as good as their UDC equivalents.
SNOOPY
Be good to see the s/p stabilise and advance when this relentless daily selldown stops..................whenever that might be!
Not what you'd call a tightly held register, the curse of relatively cheap shares.
Will have to wait for next tuesday to see where they're at.
Dairy Prices down again in latest auction - WMP down 3.7%
No comment because as Tiger, Marilyn and others say this doesn't have much impact on Heartland
Sure Dairy gets the headlines however have you consider the agricultural service industry loan book related to the regional economy as a whole give what area of farming actually is doing well? Interesting increases in impairment provision announced by a couple of banks yesterday..all state they not expecting any losses! Or nothing unexpected. I actually think the banks that can maintain the best margins on residential rates will come out best.
Dairy farm prices down in January, lifestyle block market buoyant - REINZ
http://www.interest.co.nz/rural-news...-buoyant-reinz
Wonder how the LVR % is holding up.
Looking at the numbers doesn't look like many of the farms Raz mentioned have been sold
Chris Lee on todays Taking Stock article questions the HBL share price going down and then says""Ïf the fall is for fear of rising rural loan write offs then the fear would seem to be misplaced""