Because it is repayable within the year. [Says so]
As I said before the On Demand is really the only meaniful number.
BW
Paper Tiger
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The 'first' PT was advising you that you were using the numbers incorrectly,
and
the 'second' PT Iis advising you that you are [still] using the numbers incorrectly,
and the 'first' and 'second' are actually the 'I have lost count' and 'I have lost count plus one'
Perhaps if you paid attention to what is actually written and made sensible deductions this thread would have less posts on it.
If the bank managed their liquidity risk on a contractual basis they would have about $800M of cash & equivalents On Demand (jokingly known as Shoe Box banking).
Heave Ho.
Paper Tiger
Heartland HY2017 Liquidity 'On Demand' (Contractual): Refer Note 14 Cash & Cash Equivalents $69.655m plus Unrecognised loan commitments $99.061m less Borrowings ($754.583m) add Undrawn Committed Banking Facilities $49.294m Net Cashflow ($576.573m)
Looks like a shortage of cash to me. However, it is all moot because as we know:
"The banking group does not manage its liquidity risk on a contractual liquidity basis." (The 'expected demand' is the figure that banks use).
SNOOPY
One year from balance date is 30th June 2017. From note 14:
"Undrawn committed bank facilities of $49.3 million are available to be drawn down on demand via the ABCP Trust. To the extent drawn, $49.3 million is contractually repayable in 6-12 months' time upon facility expiry."
Yet we also know that (note 7):
"The banking group has securitised bank facilities of $350 million (December 2015: $350 million; June 2016: $350 million) {$350m - $276.696m = $73.304m undrawn loan headroom remaining} drawn on in relation to the ABCP Trust, which matures on 3 August 2017."
So it would seem that although 'loan reference 1' and 'loan reference 2' are both drawn on the ABCP trust, they are both different loans because the borrowing capacities are different and the maturity dates are different. Could that 'securitized loan' have been shuffled off balance sheet?
SNOOPY
I am completely baffled that despite these numbers being 'grouped' correctly for you by your friendly local Tiger you then go and re-arrange them in an apparently random manner and come up with a complete load of utter junk as a result.
The loan commitments and borrowings live together. Think about the cashflow (as you term it) and it is obvious.
By the way, Cash & equivalents and the Undrawn Committed also live together on the other side of the statement, in case you are tempted to do something novel with your creative accounts.
Best Wishes
Paper Tiger
I see your three ratios with 'On Demand', '0-6 months', '0-12 months' ratios between 'contracted' receivables maturing' and contracted 'debenture equivalents' set to be repaid. However, I do not understand the objective of grouping the data in this way (because 'contracted cashflows' are not used by the bank in their own liquidity assessments - the bank uses 'expected cashflows'). Therefore I can make no assessment as to the 'correctness' of these ratios.
Hardly random. My "Heartland HY2017 Liquidity 'On Demand' (Contractual)" table is just a reproduction of the 'On Demand' column in Note 14 of IFR2017 on Liquidity quoted line by line.Quote:
you then go and re-arrange them in an apparently random manner and come up with a complete load of utter junk as a result.
Perhaps the slightly 'dodgy bit' is my treatment of the on call borrowing headroom. This money facility could be used to pay out debenture holders who want their money back (this is what I have assumed in my table). But the same money could also be used to support the establishment of new financial receivables. In that instance the $49.294m would turn into a negative number in my table. However on a contractual basis, with money due to be returned to debenture holders grossly exceeding the maturity of the financial receivables, I think using that facility to pay out debenture holders is the more likely possibility.
That point I can fully agree withQuote:
The loan commitments and borrowings live together. Think about the cashflow (as you term it) and it is obvious.
So you are saying that I am 'double counting' in my addition because the 'Cash & Cash Equivalents' includes the 'Undrawn Committed Bank Facilities"?Quote:
By the way, Cash & equivalents and the Undrawn Committed also live together on the other side of the statement, in case you are tempted to do something novel with your creative accounts.
SNOOPY
A web search uncovered some information about ABCP trust financials.
From: http://www.thaipr.net/finance/718556
"Heartland ABCP Trust 1 is a single-seller, ABCP program sponsored by the New Zealand-based Heartland Bank Ltd. The ABCP is backed by hire purchase agreements, finance leases, and loans secured by motor vehicles and equipment and originated by MARAC, a division of Heartland Bank Ltd."
"We are affirming our 'A-1+ (sf)' rating on the ABCP issued by New Zealand Permanent Trustees Ltd. as trustee of Heartland ABCP Trust 1 after a restructure of the trust."
This comment was attached to the top of what looks like an Oz market news release (my italics):
------
"MELBOURNE (S&P Global Ratings) Aug. 16, 2016--S&P Global Ratings today said it has affirmed its 'A-1+ (sf)' rating on the asset-backed commercial paper (ABCP) issued by New Zealand Permanent Trustees Ltd. as trustee of the Heartland ABCP Trust 1. The rating affirmation follows a restructure of the trust."
That is interesting. "Heartland ABCP Trust 1" now has a higher credit rating than Heartland Bank!
"Heartland ABCP Trust 1 is a single-seller, ABCP program sponsored by the New Zealand-based Heartland Bank Ltd. (Heartland). The ABCP is backed by hire purchase agreements, finance leases, and loans secured by motor vehicles and equipment and originated by MARAC, a division of Heartland Bank Ltd."
"The restructuring of the Trust involved the replacement of Heartland as Trust Manager with AMAL New Zealand Ltd. (with certain functions delegated to Heartland) and a change in the beneficiary of the Trust, with the intention of ensuring that the Trust would not be considered an associated person of Heartland."
-----
Now I am more confused than ever. If "Heartland ABCP Trust 1" is no longer considered "an associated person of Heartland" (Note HY2017 is the first reporting period after the "Heartland ABCP Trust 1" restructuring), why are the
"Undrawn committed bank facilities of $49.3 million are available to be drawn down on demand."
for Heartland ABCP Trust 1, still part of Heartland's accounts?
SNOOPY
Snoops:
Think of a water bottle with a capacity of 1000ml.
You put 900ml of water in it,
then you drink 600ml from it.
If you have a sudden demand for water then you can drink nearly 300ml, being the water left and allowing for that little bit that sloshes around but you can never get out again and not 400ml right?
Now apply that thought process to the ABCP Trust.
But do not overthink it.
Best Wishes
Paper Tiger
When I was young and lived in Cote d'Ivoire my sole source of English language TV was CNN. Apart from the legendary Dave the Dog advert there was also another one where some guy in the USA watching the Sun going down phones his friend half way round the world who is watching the same Sun rising.
We are currently in the same boat.
Well, I am in the boat, and you are at the dog end of the Earth.
Anyway, so you have dug yourself into a deep hole and I keep sending you ladders so that you can climb out.
After a good nights sleep I awake to find that you have converted the ladder into another digging implement and are that little bit closer to the center of the earth.
So going back to basics - assume everything you think you know on this subject is wrong - then you will be right. Especially drop the abuse of the term cash flow.
Because HBL says "The banking group does not manage its liquidity risk on a contractual liquidity basis" this does not mean you ignore the figures from the contractual table and make something up instead.
Anyway I am sure you will continue to make a dog's breakfast of your analysis and I will chase the sunrise.
Must cast off
Paper Tiger
While Paper Tiger and Snoopy slug it out, one wonders what makes Paper Tiger so confident that he/she is the bona fide guru of bank finance analysis that is perfectly correct in every way at all times, while on the other hand as implied frequently, Snoopy doesn't have a clue.
Personally, I enjoy reading both viewpoints, albeit not the snide and facetious comments that come from one side of the analysis, but still cannot decide on which analysis has any merit. If I knew as much about valuing a bank as either of these characters do, I would probably not be sharing it on the internet but using it to make a gazillion on the sharemarket. Maybe even buy a bank!
For avid readers of this bank financial analysis soap opera, it might be time for the actors to front up with some credentials. By that I don't mean that the recidivist sideline bully's wade in (albeit they will be tempted) to slight the history of the discussion and analysis, moreover why should anyone believe anything either of them are saying right now, and going forward?
Baa Baa.
One has a history of being 100% correct.
The other has a history of being 100% wrong.
Follow who ever you want.Fact or fiction.
I tend to follow those who are right.
It works out a lot more profitable.
We have had nearly 6 years of this thread,so it is easy to back test,and see who is correct.