All though HBL will still not pass your test I would appreciate it if you got your facts and numbers right.
Best Wishes
Paper Tiger
Printable View
Just as well dairy loans not a problem for Heartland
Dairy industry woes a long way from over
http://www.stuff.co.nz/business/farm...kbased-analyst
Thanks for the heads up PT. What you may have not noticed is that the six month reporting period I was looking at was HY2015, which ended on 31st December 2014.
So I am talking about figures generated more than a year ago. Why have I reached back into the past like this? Because once Heartland got their problem property portfolio under control, I let them off my 'tight observation leash'. Now since I have become a TNR shareholder, I need to update my semi-annual database for compartive purposes.
I was going to do HY2015 and HY2016 together. However, because of the confusion between what data related to 'Heartland' and what data related to 'Heartland Bank' (the two terms meant slightly different things until the recent merger), I have decided to wait until the release of the HY2016 Interim report. This will contain the extra information I need which is not in the press releases made already.
So despite what you thought, my data is accurate. But is it correct? This I am now having doubts about.
First to clear up a bit of 'cut and paste' sloppiness from previous years. 'Tier 1' is a term that refers to the quality of bank capital, not loans. The capital is there to support the loans of course. But it was wrong of me to refer to 'Tier 1 loans'. So I have corrected that.
My aim was to look at 'Risk share lending' by comparing 'bank equity' with the size of the loans on the books. But should I be comparing the bank capital (all Tier 1 in this case) with:
(1) The loans made to customers (listed as finance receivables). OR
(2) The loans made from customers, and parent banks (listed under borrowings)
Granted the two are related because one supports the other. So even if I have been using the wrong one that necessarily doesn't stop me from getting the right answer, by accident :-). Up to now I have been using (2). But now I wonder if I should be using (1)? What do you think?
SNOOPY
If I may offer:
Bank capital rquirements are based on risk weightings of loans to customers, eg the preferential low risk rating afforded lending for housing compared to most commercial loans. Therefore (1) should be used.
Thanks Macduffy.
Following (1), the 'loan to' figure I should use is $2,722.443m
Following (2), the 'loan from' figure I should use is $2,657.084m
Given how little different those figures are, I am tempted to suggest that there are many things in life worth spending time in careful consideration and contemplation. And this isn't one of them!
The smaller figure, all other things being equal, requires a smaller amount of shareholder equity to support it. So you could argue that using (1) is more conservative, becasue the answer (0.2 x the figure) is a larger value of shareholder equity. That observation is not that useful though. Because in the previous comparative period:
Following (1), the 'loan to' figure I should use is $1,905.850m
Following (2), the 'loan from' figure I should use is $2,076.968m
So using (2) is more conservative. Oh dear!
SNOOPY
I brought a few more HBL this afternoon at $1.13.
Over the next year or so I am expecting 8 cents dividend.
My target price is between $1.25 and $1.35.
At $1.25 I will make 12 cents sp gain + 8 cents divie.Total 20 cents or 17.7%.
At $1.35 I will make 22 cents sp gain + 8 cents divie.Total 30 cents or 26.5%.
Perhaps over the next year[or two], the market will value HBL on its own merits,rather than grouping it with the Australian Banks.
When that happens, I expect PE expansion which will take the sp above $1.35.Therefore I am "well positioned."
I am very happy for the SP to stay low and the divi high for as long as the DRIP is operating. Keep up the good work all you HBL knockers with your negative comments. Suits me just fine thanks -:)
Time to look at the Liquidity Buffer ratio, the balance between monies borrowed and monies lent and matching up those maturity dates using a one year time horizon. The equation we are looking to satisfy is:
(Total Current Money to Draw On)/(Net Current Loans Outstanding) > 10%
Numbers are taken from the interim report dated 31-12-2014.
On one side of the equation, we have borrowings.
HNZ BORROWINGS
HNZ has total borrowings of $2,657.084m (see Statement of Financial Position). This is made up of:
1/ Term deposits ($1,784.628m) lodged with Heartland (see note 14, IR2015).
2/ Bank Borrowings totalling $565.519m
2/ Securitized Borrowings totalling $303.558m
3/ Subordinated Bonds worth $3.379m.
IR2015 does not give a breakdown given of current and longer-term borrowing maturity dates.
The group has securitized bank facilities totalling $350m, all in relation to the Heartland ABCP Trust 1 (ABCP Trust). The ABCP Trust facility of $350m matures on 4th August 2015.
These facilities are drawn to $304m (c.f. FY2014: $229m).
Securitized asset maturity date rollover renegotiations have happened without trouble over the last two years.
The amount of securitized holdings drawn has increased by $75m (33%). The maximum amount that can be borrowed under securitized arrangements has dropped again too, from $400m to $350m. The borrowing headroom available using securitized bonds is now:
$350m - $304m = $46m
All four sources of funds (itemized above) have been on loaned to customers who want loans.
HNZ LENDINGS
Customers owe HNZ 'Finance Receivables' of $2,749.232m. There is no breakdown in note 12 IR2015 as to what loans are current or longer term. However, if we look at the legal declaration to the reserve bank
http://www.heartland.co.nz/_template...x?documentid=5
and select that for December 2014 more detail is available. Note 19 from declaration DEC2014 , shows the expected maturity profile of total finance receivables due over the next twelve months.
$88.187m + $568.729m + $439.009m = $1,095.925m
These are offset by short-term borrowings expected to be repaid over the coming twelve months of
$5.132m + $310.986m + $184.161m = $500.279m
Thus, the net expected maturity of receivables is:
$1095.925m - $500.279m = $595.646m
The positive sign means that more money is expected coming in from loans to customers that have matured, than the amount of money due to be repaid to the debenture holders.
=> Pass Short term liquidity test
That bot (if there is actually one)
Saudi's selling bank stocks globally
Doubt if they have any Heartland though
Yes please! Dear Mr Market, please keep your head in the sand, and continue to ignore the great fundamentals and impressive first half report. It would be much appreciated for you to do what was done about 6 months ago, keep the share price low until Dividend reinvestment is complete, then begin a steady rise (except this time Mr Market maybe you'll wake up and not let the price drift down back into the bargain basement it is currently in)