Sure you meant possibility Winner and agree there's always the possibility of a GFC Mk2. Nice image. BBB - Capacity to make timely payment - Adequate. I guess that's adequate unless the custard really hits the fan in a major way.
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Sure you meant possibility Winner and agree there's always the possibility of a GFC Mk2. Nice image. BBB - Capacity to make timely payment - Adequate. I guess that's adequate unless the custard really hits the fan in a major way.
Spitting hairs,or just nitpicking?
I took it to mean HBL were attracting funds at the same rate the Australian Banks were paying for their NZ deposits.
What ever way you take it,HBL they are achieving what they formed Heartland for,ie attract funds at a very low rate.
investors who don't understand the risk IMO.
BBB - = 1 chance in 30 (3.33%) of default within 5 years. A rated is 1 chance in 150 (O.67%) of default in five years. Investors should be getting a 3.33-0.67 / 5 = 0.53% premium per annum on 5 year term deposits with a BBB rated bank over what they can get on an A rated bank. Throw into the mix too the Reserve Bank's open bank resolution here and people accepting very low interest rates on long term deposit with HBL simply don't understand the risks, (albeit they are fairly minor) but they are certainly not getting a return commensurate with the risk taken. A lot of things can happen in 5 years.
Interestingly HBL's 5 year term deposit rate for over $20K is 3.8% (ANZ for example for 5 years is 3.6% per annum) and that return is fully taxable so for investors on a 33% tax rate their net return for the risk is 2.55% per annum.
Total return over 5 years is thus, (ignoring compounding) = 12.75%, less risk of default 3.33% = net risk adjusted return 9.42% / 5 years = 1.88% per annum net return less an adjustment for potential loss of capital due to the possibility of the Reserve Bank invoking its open banking resolution. This post shows why I will only bank with an A rated bank.
Proof of the pudding is in the eating.
"38,000 individual depositors,19,000 of whom have been with HBL 10 years or more."
That is known as loyalty.
It does not just happen.It has been earnt.
I seem to remember posters here saying HBL would not get through the government guarantee ending.Remember those ? rubbish off course.
96.7% chance they'll all be okay for the next five years too Percy.
With each years improving ROE,and net interest margin,profit,together with Heartland Bank carrying excess capital,and the fact NZ's outlook remains excellent, I would think those in the know, would rate their chance of being all OK for the next five years as closer to 100%.I know I do.
ps.I expect HBL's share price to be in excess of $3.00 in 5 years time.
And that is why I remain "well positioned."
Hey nextbigthing - that $1.60 later in the year is a now a pipe dream i reckon. I think the mood on the street is is now rather subdued and expectations might only be about $1.20 now ...maybe $1.30 if we lucky.
Looks like acquisitions off the agenda - need that excess capital in these times.
Current price now below the 50EMA, 100EMA and 200EMA. Thats not good is it.
What are you hearing on the street up your way mate?