Thanks Xerof and Winner69 for the background information of Tomlinson.
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http://www.stuff.co.nz/business/6845...-deposit-rules
Another entrant in the P2P market.
Comments for the market reaction today? The "sudden" reaction from investors not paying enough attention to the recent events & then seeing Quadrant leaving the scene?
Well, that's my guess anyway.
I think post 5058 explains it. Another entrant in the P2P market = more competition. There's really no stopping this new trend and I am sure this will not be the last entrant in this space so IMHO HNZ need to get ahead of the curve and start one themselves rather than pay millions of dollars for what amounts to a very small share of someone else's software.
Often after a share placement you find the share price drifts back to the placement price.
Appears this is what is happening at present.
The big take-outs of the placement were it was done at $1.30, and director Greg Tomlinson, increased his holding by just under $5mil worth,taking the amount he has invested in Heartland to over $60mil..A great vote of confidence in Heartland.
Well, I'm on board this ship with my parcel filled today at $1.30. Hoping for smooth ride along...
I got my first bundle too at $1.30. This is one punt I let the discussions swayed me into joining the fun. Gut-o-meter siding on the feel good factor too so it should be swell.
A broker on the radio suggested it was the Reserve banks new lending rules re deposits on houses increasing in Auck that suppressed the s/p.
Well...if it all doesn't go as you hope Kizame....here is the remedy.
They will be shaking in their boots !
http://edition.cnn.com/2015/05/13/as...ief/index.html
Wouldn't rule it out though, as they are also aiming at retirees and rural,but don't know how the residential mortgages fit with HNZ,I think it is quite different from Harmoney, so different client base maybe,also aiming towards a niche local chinese population,that would be very lucrative I suspect.
Pretty hefty cut taken by Lend Me. I have serious reservations about this sector and suspect the real winners will be the equity owners of the p2p lenders and the fraudsters who commit identity fraud and never make a payment.
Lots of risk of default all worn by the investors...hmmm.
I share your reservations Roger. Although innovative, technically clever, and enabled by the FMC Act 2013, I can't help wondering if it's all a function of leveraging a frothy marketplace and is exposed to 'last in first out' risks. That and the nature of the low-doc arms length lending, has unquantifiable risks written all over it. LendMe (cheeky rip off brand name) does seem pitched at a much larger borrower though $20k - $2m. Their talk of aligning specific lender demographics with like borrowers is an interesting twist, it may even work. A league away from HNZ's Harmoney platform targeting the down and out's.
That interest free period on the new lounge suite run out and payments now much higher? Contact XXX now to see what we can arrange to make your life easier. XXX a division of Heartland
Ad on the radio lately
Didn't properly catch who XXX was but not familiar
Any ideas
Growth must be getting hard to come by
Maybe this http://www.ifinanceloans.co.nz
Good post. That's the part that concerns me the most. I finance website looks like a good clean one and is very well done but unsecured lending for weddings and travel and another subsidiary Holden financial services a division of Heartland bank is running a no wallet no worries marketing campaign on selected new Holden's, see www.holden.co.nz for details...basically marketing to people with no money to put down as a desposit and no payments till 2016. Prudent lending ? (shakes head :eek2:...did we learn nothing from the GFC) I dunno, none of my regular mates I communicate with by PM and e.mail seem concerned about this but I'm still really not so sure about this sort of lending...so just decided to air my concerns on the main forum and see what others think.
Does this sort of lending play out like a bad movie that we've seen before and don't want to see again ? Others would say this time its different....Hmmm
I am interested to see if it is HNZ thinking of transacting with Lendme. While HNZ strategy is to be where the BIG 4 are not, they may sense an opportunity to disrupt.
As Baa pointed out, Lendme seem to be targeting a different portion of borrowers to Harmoney, and the two may some synergies.
Old story I heard about a finance company.This guy had so much money coming in from depositors he did not know what to do with it.Millions in the post everyday.All he could lend was a few thousand here and there on a car or two.Then a lovely chap walked in and said he wanted to borrow millions to buy The Whalers Inn in Picton,as he had a new way of valuing a hotel.Mr.Burberry was in heaven,here he could lend millions.!! Yes the Whalers Inn went broke as did Burberry Finance.
Then a few years later Prudential Finance had trouble lending until a group of Indian-South African car dealers committed a huge fraud and took Prudential down.The owner of Prudential,Mr.David Llyall a very honest gentleman.put the business straight into receivership and I believe all creditors and depositors were repaid.
Then South Canterbury started to have too much money coming in,so started to lend to property developers.
Marac seeing South Canterburu,Dominion and Hanover making huge profits from property developers joined the party.
Marac did not understand the property development business so they too lost their shareholders equity.[The Marac motor vehicle,equipment lending remained profitable]
HNZ was born out of Marac recap.Today we see the Australian Banks taking on huge risks with property lending,both in Australia and HN.In NZ they are joined by Kiwi Bank and others..
Heartland thankfully are staying away from taking on the Aussies.
Heartland has a diverse lending book,with no over exposure to any sector.P2P lending and I finance means Heartland are doing what they said they would do;"open new channels to reach customers."
They are testing "the waters".We have all thought/said Heartland should be looking at growing by new channels.Well they are!!!
Each new sector they will be watching carefully,guarding their risk,and ready to expand any area that shows growth.
Holden lending.I would expect Holden are carrying the risk.
I wonder, percy, whether what you call Prudential Finance was actually Provincial Finance. I think debenture holders got 95 or so in the dollar back from Provincial.
No way Jose, or Percy, will Holden be carrying the risk for vehicle financing. As a former motor industry exec (not GM) I can assure you that manufacturers will stand many miles (kilometres?) away from any involvement in the vehicle finance contracts written by independent financiers.
The Man from the Pru - The old door to door insurance salesman trick
OMG - I'll suggest to Jeff that as he seems intent on lending to every man and their dog that he get a team of door to door salesmwn and do the yard yakka - I reckon around parts of South Auckland they would drum up a fair bit. A bit short for your tinny today are we, no worries Heartland will fix you up
That's a new channel reaching out to a new set of customers, so all acceptable
Looks very much a Holden promotion,;'On selected models",so I would take that as the same as a Noel Leeming or Harvey Norman, no deposit 3 years interest free promotion, where the retailer pays the interest in the free interest period.
Otherwise why would HNZ bother?
Why should they bother?
Because they seem desperate trying anything to get access to new customers .....grow the book.
Holden owners seen as good prospects who will come back for more loans in the future.?
HNZ seem to be moving down the old financing way path rather than banking, not surprising as that's what in their blood eh.
Becoming a bank was only a marketing ploy, that's what they said. Have they become just a 'respectable' finance business?
Next stop I reckon will be back into property development ... just too tempting maybe
Does not work for me.
Still see it as Holden moving "selected models." Just another retailer trying to move stock.The interest comes out of the retailers margin.
Yes I agree Heartland have become a "respectable" business, offering financial products to New Zealanders.The banking licence adds extra security to depositors and shareholders,as Heartland Bank needs to meet rating agency and The Reserve Bank requirements..
Property development.At the meetings I have attended Heartland have stated they will not renter this sector.
I am pleased Heartland are following up on what they said they would do, opening new channels.i finance and Harmoney offer interesting opportunities.
Yes Percy, a "respectable' finance company with 'respectable' in brackets
Get John Campbell or Richie McCaw to endorse relentlessly on TV and we have a new 'respectable' Hanover-like finance business.
Even 'respectable' has to be questioned - lending at 24% for punters to take that holiday doesn't seem too "respectable". Wonder what the penalty rate on that loan is?
Is the new channel 'LENDER OF LAST RESORT'
This sort of Holden finance, also available on 2014 model run-out HSV's at 2% is known as non-recourse finance. Yes Holden and HSV are shifting slow moving product by effectively discounting tired old product and using that discount to fund cheap / zero interest finance...the customer thinks they're getting product interest free. There is no recourse against Holden N.Z. if customers default on cars they sell to people on no deposit nothing to pay till 2016. Most people will know new vehicles depreciate by ~ 20% the moment you drive out of the showroom and seeing as customers are paying nothing till January 2016 by then the customer is probably 30-35% underwater with their vehicle acquisition seeing as interest really is accruing throughout the loan term.
One thing I learned for sure during the GFC and with all the finance company debacles is if customers have no "skin in the game" in terms of no deposit the default rate is significantly higher. Factor in that they are specially marketing to people of the "calibre" that a "no wallet no worries" marketing campaign would appeal, and I think intelligent prudent business minded people can draw their own conclusions as to whether this is prudent lending and what the likely default rate will be down the road.
Mind you controlling the LENDER OF LAST RESORT channel is not all bad.
Fits with strategy, new channel and certainly niche relative to main banks
And a hugely profitable sector I hear. You don't hear of many loan sharks going broke do you.
Another idea
Heartland should go into pawn broking
Acquire Cash Converters?
C'mon w69 , stop harassing poor old Percy...................like Heartland he's only doing his best.
Customers will have skin in the game. I'm sure HNZ won't be lending to people with poor credit records. Thus, there credit score is their skin.
Wasn't the GFC mostly around property development lending?
Personally, I'm happy with both their Holden and iFinance initiatives. It means eps growth is not solely reliant on HER.
Many of the problems with second and third tier lenders were around identity fraud and valuation fraud, known as hydraulicing in the motor vehicle industry. Jack the theoretical price of the vehicle sky high and give the illusion the customer paid a proper deposit. This is often run in tandem with minimum trade-in guarantee's e.g. $3,000 regardsless of condition provided you can drive it onto the yard. Skin in the game is genuine deposit money and in my opinion from what I have seen there is no substitute for genuine skin in the game.
A good credit record is something that can go bad quite easily in adverse circumstances. To the best of my knowledge I cannot recall this sort of no wallet no worries buying cars on no deposit and no repayments for eight months before. Anyway I've said enough, I'm not trying to talk this thing down as I still have a 10% portfolio allocation at this stage...just calling this as I see it and people can make their own minds up about whether this is prudent lending or something else.
Percy, mate you can flip that thing around the other way, no job, no need for a car. Commuting in Auckland is a nightmare in a car anyway and young people are mobile and are usually happy to shift near a transport hub.
https://www.nzx.com/companies/HNZ/announcements/264616
Heartland Bank Releases Third Quarter Disclosure Statement
9:35am, 21 May 2015 | QUARTER
NZX Release
Heartland Bank Releases Disclosure Statement for Third Quarter
21 May 2015
Heartland Bank Limited (Heartland Bank), the banking subsidiary of Heartland New Zealand Limited (Heartland) (NZX: HNZ), today released its disclosure statement for the nine months ended 31 March 2015 in accordance with the Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014.
Unaudited net profit after tax (NPAT) for Heartland Bank was $30.9m for the nine months ended 31 March 2015. Unaudited NPAT for Heartland (parent company) over the same period was $36.1m. The difference in NPAT is primarily due to the portion of Heartland’s reverse mortgage book that is held outside Heartland Bank.
Heartland expects its NPAT for the year ended 30 June 2015 to be at the upper end of the previously advised NPAT range of $46m - $48m.
- Ends -
Q1 was $11.0m Q2 was $12.5 and Q3 looks like $12.6m and Q4 $11.5m if top end of guidance meet
So if this is true "Heartland expects its NPAT for the year ended 30 June 2015 to be at the upper end of the previously advised NPAT range of $46m - $48m." then profit growth momentum has come to an end and earnings are stagnating around $12m plus or minus a bit every quarter. that seems our lot.
Things not looking too bright ...or else some some subtle earning management taking place,
Bloody disappointing. Only decent thing is that the her stuff is making money
But percy will be rapt ....they continue to do as they say.
Well done heartland, if that's your full year expectations this year then not one would what one would expect from the previous hype.
Heartland at best seems to be have settled into being a steady as she goes finance company and will be valued accordingly.
That $1.60 plus shareprice is now years away
I was going to put something in Maori but my Maori mate said even you white guys might be offended so left it out.
Axe, you happy with that announcement?
In Jeffspeak "at the upper end" is definitely not "more than" (the word range is key)....ie somewhere between $47.2m and $47.8m which sounds like $47.5m to me. Bugger that's only $11.4m in Q4
The optimists are hoping the next announcement is "pleased we delivered more than previous guidance" or something .....but heck the years almost over if Jeff came out with that all credibility would go out the window as far as I am concerned
From 1 February 2015 when I basically came out and admitted the stock was fairly priced at $1.32 and no longer a bargain...sometimes I really hate it when I'm right and this is one of those occasions.
Impeccable timing by Quadrant, AGAIN. I think $2 is 4-5 years away now. Earnings growth in 2016 and 2017 will be likely to slow down with increased bad and doubtful debt provisioning for the reason's I've mentioned more recently. Very healthy sized fully imputed dividends means its a good hold for a sensible sized allocation in a well diversified portfolio in my opinion.
Economy is currently experiencing deflation in my opinion and is hardly going off like the rock star economy many were commenting it would last year is it !!
Good time to lean on a boat manufacturer for a good deal seeing as none of the farmers will be buying one. www.profileboats.co.nz I'm sure HNZ would loan me $100K with no payments till 2020 :D
Can you tell that I went to the boat show last weekend ?:lol:
Anyway getting back to being serious, I'm estimating a fully imputed final divvy of 4.5 cps up 1.0 cps on last year's final for a total of 7.5 cps this year fully imputed = 7.5 / 0.72 = 10.417 cents gross which on a SP of $1.29 gives us a current year gross dividend yield of 8.1% Prospects for growth in dividends for the next two years are fairly muted in my opinion but you are being paid quite well to wait for future growth when the economy is performing better so its a good hold in an ultra low interest rate environment, an environment that as I see it will remain for the foreseeable future.
Has HNZ become a dividend yield story now ?
Roger, from the Bank disclosure accounts I see your bad debt story is already unfolding
For 9 months the expense is a nice round $7m (nice round numbers in millions usually a guess?) compared to full year last year of $5.9m
The rate they are increasing full year probably $10m (more exact this time though) ....ouch
And that doesn't count any HER stuff
Yeah mate just a guess. All my regular mates and contacts think I'm a conservative old bugger thinking specific and general bad debt provisioning is going up rapidly...I guess some of us have longer memories than others when it comes to reckless lending policies of the finance companies pre GFC. Really it wasn't that long ago that all this no deposit lending got finance companies in big trouble, doesn't anyone at HNZ have a memory of these things for goodness sake ! No, lets lend to young people with a no wallet, no worries campaign targeting young people with no money, that's a good idea right, just like Harry and Lloyd from the memorable movie Dumb and Dumber, they're good for it right ?...(FFS shakes head and wonders what the marketing team were smoking at the time they had that idea)
You mark my words, EPS profit growth in 2016 will be very close to zero, (maybe even negative if Dairy stays really low or goes even lower and some of those sharemilkers with their herds as only security go under :eek2:), by the time the auditors force them to get real with their provisioning in their 2016 full year accounts. You read it from me first. Quadrant are good at seeing the over the horizon stuff aren't they mate !
Its become a dividend yield stock in my opinion. Still 8% as an shareholder has its virtues when you only get 4% as a depositor, thank God there's a silver lining in this somewhere :)
I'll have some hard questions for the board at the next ASM.
A finance company being conservative without the aid of their auditors :lol:
Cue... Percy's entry to remind us this is indeed a bank and as such is heavily regulated and overseen by the Reserve bank and they do as they say they will and this is one of if not THE safest company on the NZX.
Well it is a wonderful life for me.
A very pleasant evening,and a nice meal last night at the sharetrader get-together.and some interesting tips from KW.
A beautiful day here in Christchurch, made even better with great book sales.
But the icing on the cake ,is Heartland confirming very thing is on track, to deliver a NPAT for the year, at the upper end of the previously advised range.
Thank you Heartland for delivering on what you say you will do.
Heartland only working as hard as they have to to keep Percy happy .... so why work harder if Percy is happy and contented Jeff and his merry men say. If Percy was more demanding and asked Jeff for a bigger dividend for himself and his dear wife Jeff would probably deliver, they are capable of doing so.
I am very happy to grow rich [or richer] slowly and steadily.
Banks have a history of doing just that.
In the meantime the great dividends add to the enjoyment.
On checking yahoo finance charts ,I see Heartland's share price is up 67.53% in two years.
That is what I call delivering.!! Plus we have enjoyed fully imputed divies..
Could not ask for more!!!!
Slow down, Jeff I can't take too much more of the excitement!!!!
No, HNZ needs a good solid aquisition to keep it simmering along imop, the sooner this happens,with the likes of maybe MTF,the sooner the growth momentum continues. Obviously it has to be quality and at the right price.
Ok. In response to some PMs I will concede and say I am wrong and been unfair of my critical assessment of recent heartland performance.
Yes, Jeff and his team are doing their darnedest in making as much money as possible. The guys are really at it and their efforts will result in a full year NPAT of say $47m. Maybe a fraction more.
That's a fantastic result compared to the $36m made last year.
To align my financial model to HNZ forecast I have had to wind back growth expectations, reduced the NIM I was using to less than last year, increased bad debts but keep the cost of doing business much the same. HER seems to be doing better than I expected so left my assumptions about that the same. . So my forecast slightly above $47m now.
The worry is that H2 earnings will be the same as The first half. That still has me stuffed but a worrying sign that growth has stopped - and maybe earnings are starting to decline as the fourth quarter earnings are going to be less than the third quarter.
I don't think I'll bother to even try to forecast FY16 until after the full year announcement and hearing what Jeff says. Hope this half is just a blip on the long term growth path.
So all honky dory, esp if HNZ if is as roger says might now just be a yield play
Heartland guidance pre Seniors acquisition was $34m to $37m for FY14 - eps of 8.8-9.5 cents at the time.
This year NPAT say $47m - eps 10.0 cents.
If one assumes that even without Seniors acquisition FY15 would be better than FY14 than FY15 eps would probably have been in excess of 10 cents (up from the 8.8-9.5 cents FY14 expectations with the final number somewhere in the middle ).
The forecast FY15 eps of 10 cents of course includes the Seniors acquisition (which has made a positive contribution to HNZ earnings this year)
The Seniors acquisition was touted as being eps accretive. Doesn't look like it to me ...I am still to be convinced.
Looks like $47.0m NPAT our lot this year, maybe a fraction more
That's 10.2% ROE (on average equity but just 10.0% if rounded up on year end equity)
Bit higher than FY14 but seems a less (a lot less?) than what was implied from presentations last year
Priority FY15 was a "Focus on improving ROE" .......seem to have stopped improving over the last half year
No.
It is not a promotion for Heartland to attract customers.
It is simply a promotion to move unsold Holden vehicles,by Holden dealers.
The interest on the interest free period will be paid by Holden Dealers.
Marac, part of Heartland,has been financing motor vehicles for over 55 years.Their records will give them a fair change of working out what the default rates will be.Just remember bankers do not give anything away.Even I-finance charge you a fee to refund any over payment you make.!
One must always remember the definition of a banker. "A banker is a man who lends you an umbrella when the sun is shining,and wants it back when it starts raining."
Heartland is run by bankers.They will be mindful of having the books watched carefully by the rating agency, and The Reserve Bank,so will not be putting a lot at risk.
Now back to Motor Trade Finance,MTF.Well a year ago I would have thought HNZ would have taken them over in the next few months.
They had a good sniff,but the court case liability, together with MTF not being interested in being taken over by HNZ,meant nothing has happened. Today I am still of the view MTF will be taken over,but I don't know whether the acquirer will be HNZ or TNR.
I am well positioned owning both HNZ and TNR..!!!
New channels.
Heartland said they would open new channels.They are certainly doing this with I-finance and Harmoney.
As with any new business there will be success and failures.The directors will have viewed management's proposals,and set boundaries.
I expect Hearland will build on their successes and cut their losses.With not a "huge" amount at risk it is positive that HNZ are exploring these new channels.
REL.It would appear to be a great business with excellent margins and security,that is not expanding as quickly as we [or management]expected.Hopefully new channels and more promotion will be successful.It may be a sleeper,but long term I think the prospects are greatly improved by Australasia's rapidly growing "property rich,cash poor" aging population.
I think you may be underestimating the contribution that HER is already making to Heartlands profitability.
The difference between the Banks profit as disclosed to RBNZ and HNZ profit is said to HER. For the last quarters that amounts to $5.2m and looking lie $7.5m for the full year.
But some additional HER lending is also included in the Banks numbers as well - suggesting that HER profit is in excess of $7.5m. How much more?
You mention 'excellent margins" in the HER business but I wouldn't be surprised if HER margins are lower than what they make on other business.
That TV ad seems to prompted more than expected enquiry from interested oldies and they are more than confident about converting these to real loans. Give praise and its amazing what underlings will tell you.
Seniors cost $87m so $8m odd profit first full year a good return.
So even if HER contributes only $8m this year (apparently $1m last year) then the old HNZ business has grown from $35m NPAT to $40m. Not too bad and makes sense. Pity Seniors not really eps accretive.
Fascinating that W69 seems to have inherited Snoopy's mantle..................makes more sense too!!
Talking of opening new channels:
http://www.seek.co.nz/job/28707041?pos=7&type=standard
"Involve supporting the development and advancement of Heartland’s capabilities with a particular focus on Maori Banking products."
"Provide guidance on cultural protocols and there will be some face to face customer interaction as part of a team, to promote Maori Banking products."
Seems like a rather unusual path to go down.
Also, there seems to be a significant marketing push for Ifinance. I've heard extensive radio coverage across a range of stations.
The next three months or so are going to see the share price inexorably grind its way down to $1.20 (or maybe less)
Only an acquisition will stop that happening
Anybody have any idea how much money they make from the transactional side of banking operations?
Let it grind down.
Lower share price would mean I will get more shares when they pay the next divie as I have DRP,and shareholders taking the fully imputed cash, will receive a higher yield..
I don't mind how long the next acquisition takes so long as it is another good one.!
You seem awfully certain?
EDIT: With a director adding ~$5,000,000 to his holding at $1.29 I think it would make sense to believe the price should increase - or that he at least believes as much.
Why would he buy-in "now" if he could get it at a cheaper rate in ~3months time?
(forgive my young brain!)
Winner, if you go from talking up its chances of getting to $1.60 soon to calling it a finance company worth less than $1.20, then a disclosure on your posts regarding your holdings would be nice. :)
NBT
Disc Hold.
First point I am only talking about the share price movements between now and full year (or an acquisition). They have told us the FY is $47m .... as Percy says they always do what they say. If Jeff says nice things in August the share price should go up but I think seeing expectations have been diminished that $1.60 plus I said is now far away
Secondly Tomlinson looks like he took a chunk of the Quadrant shares. He was offered and took. He a long term investor and couldn't give a stuff about what the share price is in August. I doubt he would ever buy large amounts in dribs and drabs anyway.
Thirdly re the share price heading to $1.20 - have you noticed the trend down from late January - nearly four months. With the cat out of the bag about the FY result there is nothing to reverse that trend (except an acquisition). Given up on my up trending channels - that was depressing. Watching the down ward channels now
Their guidance was a disappointed. My expectations are now much lower. As I said at the time $1.60 to $2.00 is now a very distant target, not by Christmas
Reckon price will drift down for the next few months .... and then depending on what they say in August might/should recover
If it means anything I have some
Kiwibank reporting net profit for 9 months to 31 March up 35% yoy and net interest income up a strong 25%.
Co-op also reporting a very strong result with net profit up 24%, bad debt expense down 32% and mortgage lending up 12%.
The sector seems to be going strong so HNZ hopefully on track to reach upper end or beat guidance !
A snippet from the Sea Dragon report
• Heartland Bank extends working capital facilities as the demand for working capital intensifies
Good on them supporting the smaller growth companies in NZ