sharetrader
Page 929 of 1722 FirstFirst ... 42982987991992592692792892993093193293393997910291429 ... LastLast
Results 9,281 to 9,290 of 17211
  1. #9281
    ShareTrader Legend Beagle's Avatar
    Join Date
    Jul 2010
    Location
    Auckland
    Posts
    21,362

    Default

    Quote Originally Posted by Snoopy View Post
    My above quote is the 'glib solution' for liquidity problems of banks. The problem with the above solutions are that when a bank has a liquidity problem it is an unusual or rare event. There is no 'provision for low liquidity' in the accounts as there is a 'provision for impaired loans'. Liquidity events are largely unforeseeable because they so unusual.

    But one thing is for certain. In a real liquidity crisis , there will not be run of depositors rushing to put new debentures in the bank no matter how high the interest rate offered. The sad fact is that the 'glib solutions' which look perfectly reasonable when a bank is not in crisis will completely fail when it is.

    The only real protection from a liquidity crisis are the 'sideways solutions':

    1/ to have a 'parent bank' willing to supply lines of credit while the crisis blows over.
    2/ to have new share capital issued at a heavily discounted price to new and existing shareholders.

    The only indicator that is regularly measured at annual accounts time is 'bank borrowing headroom'. Unfortunately for Heartland shareholders 'borrowing headroom' is not (fully) given in the annual report. So it is up to shareholders to make an 'educated guess' as to what that borrowing headroom might be.

    SNOOPY
    It is slightly unusual that they continue to pay 3% for on call funds which is quite a significant divergence from what most of the Australian owned banks pay. This leaves them a little exposed in terms of liqudity to hot on call money in my opinion.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  2. #9282
    IMO
    Join Date
    Aug 2010
    Location
    Floating Anchor Shoals
    Posts
    9,696

    Default

    Quote Originally Posted by Roger View Post
    Let it go mate, the risks were very real. Carrying resentment around like that isn't good for your health.
    No resentment at all; just how the experience was on the other reality side.

  3. #9283
    ShareTrader Legend Beagle's Avatar
    Join Date
    Jul 2010
    Location
    Auckland
    Posts
    21,362

    Default

    Quote Originally Posted by Joshuatree View Post
    No resentment at all; just how the experience was on the other reality side.
    Or more correctly, how you perceived it. Perhaps more importantly the SP ostensibly did nothing for two years because the market perceived the risks to the balance sheet and profitability from the near dairy collapse were indeed very real. I maintain all the N.Z. banks dodged a serious bullet here. One more year of ultra low dairy payout and the results could have been extremely ugly for the sector and for all banks involved.
    In the end Heartland's approach of carrying some farmers through this worked mainly because Heartland got lucky with the dairy recovery.
    Sometimes hope is a strategy that works, other times...
    Believe it or not and I know you won't, some posters thanked me for highlighting the serious risks, albeit in, perhaps with the benefit of hindsight, a too dogmatic way.
    Last edited by Beagle; 24-04-2017 at 01:05 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  4. #9284
    IMO
    Join Date
    Aug 2010
    Location
    Floating Anchor Shoals
    Posts
    9,696

    Default

    Many of us experienced it and you ended up in the bin more than once. The threads are there in their 100's. I needed to present the other side to that post to give balance.Live and learn do we all.

    Sold a few today as i needed to rebalance a little as HBL was getting just too big a % of my portfolio.

  5. #9285
    On the doghouse
    Join Date
    Jun 2004
    Location
    , , New Zealand.
    Posts
    9,222

    Default Liquidity Buffer Ratio aka Meads Test HY2017 (Part 2)

    Quote Originally Posted by Snoopy View Post
    HNZ LENDINGS vs HNZ DEBENTURES

    Customers owe HNZ 'Finance Receivables' of $3,113,957,000. There is no breakdown in AR2016 (note 11) as to what loans are current or longer terms. However, if we look at note 20, we can derive the expected maturity profile of total finance receivables due over the next twelve months.

    On Demand 0-6 Months 6-12 Months Total
    Expected Receivables Due $84.154m + $961.274m + $639.962m = $1,685.390m
    less Expected Deposits for Repayment $21.630m + $289.314m + $304.975m = $615.919m
    equals Net Expected Cash Into Business $62.524m $671.960m $334.987m $1,069.471m {B}

    If more money is coming in from customer loans being repaid, than is having to be repaid to the debenture holders, then this is a good thing for debenture holder liquidity. That is the case here.
    HNZ LENDINGS vs HNZ DEBENTURES

    Customers owe HNZ 'Finance Receivables' (Lendings) of $3,334,800,000. If we look at note 14 of IFR2017, we can derive the expected maturity profile of total finance receivables due over the next twelve months. (This is what I did in part 1 of this calculation.) Adding the totals for the ensuing twelve months gives:

    On Demand 0-6 Months 6-12 Months Total
    Expected Receivables Due $69.655m + $1,058.738m + $710.751m = $1,839.144m
    less Expected Deposits for Repayment $22.713m + $339.288m + $323.666m = $685.667m
    equals Net Expected Cash Into Business $46.942m $719.450m $387.085m $1,153.477m {B}

    If more money is expected coming in from customer loans being repaid, than is having to be repaid to the debenture holders, then this is a good thing for liquidity and debenture holders being repaid. That is the case here: good news for debenture holders.

    It is important to note that this calculation is based on the loan book position at balance date. New loans taken out since balance date are not included. Neither are brand new customer debentures invested with Heartland since balance date. So these figures are not a forecast of what will happen. But they are are forecast of what will happen if all customer loan and deposit activity ceased at last balance date. This means the figures are best suited for comparing with previous periods, rather than being forecasts of what will happen in their own right.

    Compared to six months ago, the expected liquidity imbalance has improved overall. But the 0-6 month period has blown out, signalling a possible 'wall of cash' to be returned to Heartland between December 2016 and June 2017.

    SNOOPY
    Last edited by Snoopy; 26-08-2018 at 09:53 AM.
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  6. #9286
    On the doghouse
    Join Date
    Jun 2004
    Location
    , , New Zealand.
    Posts
    9,222

    Default

    Quote Originally Posted by Roger View Post
    It is slightly unusual that they continue to pay 3% for on call funds which is quite a significant divergence from what most of the Australian owned banks pay. This leaves them a little exposed in terms of liquidity to hot "on call money" in my opinion.
    At last balance date, 31-12-2016, Heartland had $754.583m of 'on call' borrowings in the "call deposit" account.

    Quote Originally Posted by Snoopy View Post
    Position at EOHY2017 On Demand 0-6 Months 6-12 Months Total
    Expected Receivables Due $69.655m + $1,058.738m + $710.751m = $1,839.144m
    less Expected Deposits for Repayment $22.713m + $339.288m + $523.666m = $885.667m
    equals Net Expected Cash Into Business $46.942m $719.450m $187.085m $953.477m {B}
    According to my 'expected' modelling, only 3% of the $754.583m total is likely to be requested 'on demand' ($22.713m). But 'expected' modelling is based on 'normal' customer behaviour. And 'competitor response' can lead to anything but normal behaviour.

    So what would happen if say, the likes of ANZ were to increase their on call interest rates again to 2.5%? That is still less than Heartland's 3%. But ANZ has a much higher credit rating than Heartland. So I would bet such an ANZ move could see an exodus of funds from Heartland. Nevertheless, $719.450m of 'Heartland' net current term funds are expected to be repaid in the six month period ended 30th June 2017. So even if Heartland lost 90% of their on call funds:

    0.9 x $754.583m = $679.125m

    $679.125m is still less than $719.450m. So it looks like a severe (90%) withdrawal of customers "on call deposits" could be manageable by Heartland from a cashflow liquidity perspective.

    SNOOPY
    Last edited by Snoopy; 25-04-2017 at 07:45 AM.
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  7. #9287
    percy
    Join Date
    Oct 2009
    Location
    christchurch
    Posts
    17,221

    Default

    Liquidity.
    Each bank has a treasury dept that matches maturity with funding.
    If they have too much liquidity short term. they lower their short term deposit rates.
    If they are short 18 months out they raise their deposit rate for that time.
    That is why often one bank has a higher rate say one year out than others.
    Trying to read too much into banks' liquidity is usually a waste of time.
    I leave it to others to waste their time.

  8. #9288
    ShareTrader Legend Beagle's Avatar
    Join Date
    Jul 2010
    Location
    Auckland
    Posts
    21,362

    Default

    Snoopy with all due respect mate I think what Percy has said above sums the situation up. They tweak deposit rates as and when they see fit to manage liquidity, it really is as simple as that. I don't think customers are as focused on credit ratings as you might perhaps imagine. Most people do business with a bank based on the fact that they believe they can trust them to prudently manage their money and give them competitive terms. Heartland is an investment grade credit rated bank and probably more likely to have an upgrade at some stage in the foreseeable future than a downgrade in my opinion.
    I plan to open a call account with them when I get some spare time.
    Last edited by Beagle; 25-04-2017 at 10:35 AM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  9. #9289
    Dilettante
    Join Date
    Mar 2010
    Location
    Down & out
    Posts
    5,407

    Default

    I think this Consumer survey reinforces what you're saying Roger http://www.stuff.co.nz/business/mone...z-survey-shows

    Nobody loves Heartland though :-(

  10. #9290
    percy
    Join Date
    Oct 2009
    Location
    christchurch
    Posts
    17,221

    Default

    Quote Originally Posted by iceman View Post
    I think this Consumer survey reinforces what you're saying Roger http://www.stuff.co.nz/business/mone...z-survey-shows

    Nobody loves Heartland though :-(
    Not so.!!!!!!
    All [except one] on this thread love them.!!!
    Going by their "organic" growth we are not alone.!

Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •