Industry Group Risk
From AR2019 note 22, the greatest 'business group' risk in dollar terms is agriculture, with $741.947m worth of assets. This represents an increase of just $0.281m over the previous year.
$741.947m/ $4,845.570m = 15.3% of all loans
While the size of the agricultural portfolio has barely changed, this significant percentage decrease of the total is due to many more reverse mortgage loans and finance and insurance loans being written.
Indeed reverse mortgage loans, for the first time, are being declared separately as an asset class. $1,318.819m of Reverse Mortgages are declared on the HGH balance sheet. Subsidiary 'Heartland Bank' declares $561.211m of NZ based Reverse Mortgages on the books. That means we can find the size of Heartland's Australian Reverse Mortgage book by simple subtraction:
$1,318.819m - $561.211m = $757.608m
This means that 'Australian Reverse Equity Mortgages' (Aussie REM), if you regard that as a credible loan category, can be thought of as the largest category of 'Account Receivables'
$757.608m/ $4,845.570m = 15.6% of all loans
Regional Risk
From AR2019 note 22, the greatest regional area of credit risk in dollar terms is 'Rest of the North Island' , with $1,214.744m worth of assets. This represents:
$1,214.744.m/ $4,845.570m = 25.1% of all loans
The 'Rest of North Island' loans (which excludes Auckland and Wellington) have risen 8.1% in numerical terms over the year for the second year in a row. (Auckland still covers 23.3% of all loans).
The multi-year picture is shown below:
|
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
Largest Regional Market |
Auckland (30%) |
Auckland (30%) |
Auckland (25%) |
Auckland (26%) |
Rest of NI (25%) |
Rest of NI (26%) |
Rest of NI (26%) |
Rest of NI (25%) |
Largest Industry Group Market |
Agriculture (24%) |
Agriculture (21%) |
Agriculture (16%) |
Agriculture (17%) |
Agriculture (18%) |
Agriculture (19%) |
Agriculture (17%) |
Aussie REM (16%) |
Overall Heartland looks less risky than at any time in its history from a 'Customer Concentration Test' perspective.