Originally Posted by
Snoopy
The listed banks on the NZX comprise ANZ, WBC and HBL. ANZ I believe has the largest gross exposure to agriculture. See my post 397 on the ANZ thread.
$19,787m / $186,266m = 10.6% of the loan book (from FY2016 year). But that of course covers all of agriculture, not just dairy.
From my post 9343 on the Heartland thread:
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Industry Group Risk
From reference Note 12c, the greatest 'business group' risk in dollar terms is Agriculture, with $712.072m worth of assets. This represents:
$712.072m/ $3,718.710m = 19% of all loans
This is slightly up on FY2016, when agriculture was
$628.202m/ $3,461.292m = 18% of all loans
These figures are quite high and continue trending in the wrong direction for HY2017. Given that Heartland is nominally a specialist agricultural lender I wouldn't be too concerned. But if agricultural loans go above 20% of the total (or dairy representing about half the agricultural loans above 10%), then I would sound an alarm bell.
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Heartland have already admitted that dairy is around 50% of their rural lending. So the proportion of Heartland loans just in dairy is roughly the same as the proportion of all agricultural loans in ANZ.NZ. Of course you cannot buy shares in ANZ.NZ (the New Zealand bit carved out). You can only buy shares in the whole ANZ bank based out of Australia. And that reduces ANZ shareholder exposure to rural loans in total to well below 10%. My guess is that exposure to dairy on a straight HLB vs ANZ comparison in bank portfolio terms would see Heartland's dairy exposure higher by a factor of three. Of course the ANZ loan portfolio has its own risk factors. But nothing else listed in NZ comes within cooee of Heartland if you want dairy loan exposure.
SNOOPY