HGH - Heartland Group Holdings

[winner69]

LOL thanks Peat, such a memorable pendant...looks like something KW would wear :) Yes mate as you suggest things do overshoot in both directions but I suspect if it does get down to $1.40 there will be plenty of other things to worry about as well so that's not something I want to see.

A thing of beauty though that chart ...from an artistic point of view that is.

Peat should have used a log scale though or even used the log of the price data. Snowy will not be pleased.

[percy]

LOL thanks Peat, such a memorable pendant...looks like something KW would wear :) Yes mate as you suggest things do overshoot in both directions but I suspect if it does get down to $1.40 there will be plenty of other things to worry about as well so that's not something I want to see.

Only start to worry when directors and management start to sell.
In the meantime I have been spending a bit of my lovely HBL divie.Brought both daughters a new oven.Should be plenty of decent tucka treats coming my way this Christmas.Will have Heartland to thank..

[Baa_Baa]

A thing of beauty though that chart ...from an artistic point of view that is.

Peat should have used a log scale though or even used the log of the price data. Snowy will not be pleased.

If Snowy had a chart that illustrated his high horse and rude comments, it'd be alot easier than deciphering the cryptic atonements you're supposed to make.

Poor Beagle reckons 10-15% is a serious ("full blown") correction. Been a tough week for some shares, but also a long time since the pooh really hit the fan, which it hasn't, we all tend to forget the pain, especially after 10 years of sustained upside.

I reckon today is a decent illustration of what the market thinks, any sign of the bull, they get a sniff of the futures and behold, it's all good despite another few hundred points down on the open market and pile into their darlings like there's no tomorrow.

Still, there's a few who don't give a toss about capital value. As long as they're growing EPS it's all good.

[Snoopy]

Updating this number for the full year FY2017. The equity ratio is an assessment of the balance sheet risk of the total company, with all finance receivables and the supporting borrowings (whether they be from debenture holders or parent supporting banks) included.

Equity Ratio = (Total Equity)/(Total Assets)

Using numbers from the Heartland AR2017

= $569.595m/ $4034.671m = 14.1%

The customer loan base year on year has once again increased a little faster than the company equity (+14.4%). This means the balance sheet is being worked a little harder. This isn't a problem if the risk of loans becoming distressed is going down.

The significant increase in share capital over the year was therefore from (reference "Statement of Changes in Equity")



1/ Retained Earnings: $62.240m - $41.977m = $20.263m


2/ Dividend Reinvestment Plan: $10.590m


3/ Share Based Payments to staff: $1.053m


4/ Issue of Share Capital: $40.003m - $0.655m = $39.348m


Total $71.254m



This is a big increase on the 'new capital generated within the existing Heartland in FY2016' ($22.996m), with most of that increase accounted for in the capital raising undertaken over the year.

The historical picture of this ratio is tabulated below.




FY2012FY2013FY2014FY2015FY2016FY2017
Target

[
Equity Ratio16.0%14.6%15.0%14.3%14.1%14.1%
-






With all the recent market upheavals, shareholders might like to know just how conservatively geared HBL is in an historical context.

Updating this number for the full year FY2018. The equity ratio is an assessment of the balance sheet risk of the total company, with all finance receivables and the supporting borrowings (whether they be from debenture holders or parent supporting banks) included.

Equity Ratio = (Total Equity)/(Total Assets)

Using numbers from the Heartland AR2018

= $664.160m/ $4,495.926m = 14.8%

The customer loan base (finance receivables) growth year on year (+12.4%) has in relative terms reversed and is now growing more slowly that the company equity (+16.6%). This means the balance sheet has been made 'less stressed' over the year.

The significant increase in share capital over the year was therefore from (reference "Statement of Changes in Equity")



1/ Retained Earnings: $71.221m - $47.895m = $23.326m


2/ Dividend Reinvestment Plan: $12.745m


3/ Share Based Payments to staff: $0.666m


4/ Issue of Share Capital: $59.225m - $0.910m = $58.315m


Total $95.052m



This is a significant increase on the 'new capital generated' within the existing Heartland over FY2017 ($71.254m), with most of that increase accounted for in an even bigger capital raising undertaken over FY2018.

The historical picture of this ratio is tabulated below.




FY2012FY2013FY2014FY2015FY2016FY2017FY2018
Target

[
Equity Ratio16.0%14.6%15.0%14.3%14.1%14.1%14.8%
-



So Heartland is more conservatively geared than at any time in the last four years.

SNOOPY

[Blue Skies]

With all the recent market upheavals, shareholders might like to know just how conservatively geared HBL is in an historical context.

Updating this number for the full year FY2017. The equity ratio is an assessment of the balance sheet risk of the total company, with all finance receivables and the supporting borrowings (whether they be from debenture holders or parent supporting banks) included.

Equity Ratio = (Total Equity)/(Total Assets)

Using numbers from the Heartland AR2018

= $664.160m/ $4,495.926m = 14.8%

The customer loan base (finance receivables) growth year on year (+12.4%) has in relative terms reversed and is now growing more slowly that the company equity (+16.6%). This means the balance sheet has been made 'less stressed' over the year.

The significant increase in share capital over the year was therefore from (reference "Statement of Changes in Equity")



1/ Retained Earnings:
$71.221m - $47.895m = $23.326m


2/ Dividend Reinvestment Plan:
$12.745m


3/ Share Based Payments to staff:
$0.666m


4/ Issue of Share Capital:
$59.225m - $0.910m = $58.315m


Total
$95.052m



This is a significant increase on the 'new capital generated' within the existing Heartland over FY2017 ($71.254m), with most of that increase accounted for in an even bigger capital raising undertaken over FY2018.

The historical picture of this ratio is tabulated below.





FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
FY2018
Target


Equity Ratio
16.0%
14.6%
15.0%
14.3%
14.1%
14.1%
14.8%
-



So Heartland is more conservatively geared than at any time in the last four years.

SNOOPY


Thanks Snoopy, always appreciate your posts

[Snoopy]

The underlying debt of the company (debentures and other loan supporting borrowings removed) is the first factor in an attempt to assess the underlying shareholder owned skeleton upon which all the receivables that are loaned ultimately sit.

According to the full year (FY2017) statement of financial position the debt excluding borrowings is:

$25.479m + $9.856m = $35.335m (1)

-----

To calculate the total underlying company assets we have to (at least) subtract the finance receivables from the total company assets. I would argue that you should also subtract the 'Investment Properties' (the rump of the problem property portfolio) and the unspecified 'Investments' (held on behalf of policy beneficiaries) from that total:

$4.034.671m - ($3,545.897m +$4.909m + $318.698m) = $165.167m (2)

We are then asked to remove the intangible assets from the equation as well:

$165.167m - $71.237m = $93.930m

----


Now we have the information needed to calculate the 'underlying company debt' (skeletal picture) net of all Heartland's lending activities:

$35.335m/$93.930m= 37.6% < 90%

Result: PASS TEST

The historical picture of this ratio is tabulated below.



FY2012FY2013FY2014FY2015FY2016FY2017Target

[
Underlying Gearing Ratio20.2%14.7%40.5%58.4%37.4%37.6%< 90%





The underlying debt of the company (debentures and other loan supporting borrowings removed) is the first factor in an attempt to assess the underlying shareholder owned skeleton upon which all the receivables that are loaned ultimately sit.

According to the full year (FY2018) statement of financial position the debt excluding borrowings is:

$24.249m + $11.459m = $35.708m (1)

-----

To calculate the total underlying company assets we have to (at least) subtract the finance receivables from the total company assets. I would argue that you should also subtract the 'Investment Properties' (the rump of the problem property portfolio) and the unspecified 'Investments' (held on behalf of policy beneficiaries) from that total:

$4,495.926m - ($3,984.941m +$9.196m + $340.546m) = $160.943m

We are then asked to remove the intangible assets from the equation as well:

$160.943m - $74.401m = $90.542m (2)

----


Now we have the information needed to calculate the 'underlying company debt' (skeletal picture) net of all Heartland's lending activities [ (1)/(2) ]:

$35.708m/$90.542m= 39.4% < 90%

Result: PASS TEST

The historical picture of this ratio is tabulated below.



FY2012FY2013FY2014FY2015FY2016
FY2017FY2018Target

[
Underlying Gearing Ratio20.2%14.7%40.5%58.4%37.4%
37.6%39.4%
< 90%



SNOOPY

[Snoopy]

The underlying debt of the company (debentures and other loan supporting borrowings removed) is the first factor in an attempt to assess the underlying shareholder owned skeleton upon which all the receivables that are loaned ultimately sit.

<snip>



Target

[
Underlying Gearing Ratio
< 90%





I wish to expand upon the idea of watching the 'Underlying Gearing Ratio' and try to figure out where that "< 90%" standard came from. I didn't create any of this. But I figure it is best to try and understand what this means rather that blindly following numbers.

Suppose I had a fully paid up house in Auckland worth $1m. Suppose I wanted to utilise this asset to start a finance business.

Step 1: Sell the house and bank the cash.
Step 2: Move into a rented one room bedsit on the North Shore, and prepare my plans for the 'Snoopy Finance Limited' conquest!

My net tangible assets (total underlying company assets) now consist of $1m in cash (yay).

This means the debt I can take on from 'parent bank' adds up to $899,999.99.

That is because: $899,999.99/$1,000,000 < 90% (the BC3 covenant standard)

Effectively I now have $1.9m in 'seed capital' to play with.

If I go with an 'equity ratio' of 15% for the whole of 'Snoopy Finance Limited' then I can support a loan book of total size of:

$1m/0.15 = $6.666m

That means the bank would be very happy for me to borrow $5.666m from 'you lot' as debenture money. I quick 'wag of the tail' and all you guys would be falling over yourselves to lend me the money. Deal done!

A multi-million dollar loan book sounds good. I think I am on my way to becoming really rich. But I only have a $1m 'buffer' before all my cash is wiped out in the event of a downturn. If GFC mk2 reduces everything that I have loaned in value by

$1m/ $6.666m = 15%

then all my share capital is wiped out. Of course I could borrow a bit from 'parent bank' (circa $900,000) to try and re-engineer my financial position to something acceptable by balance date. But if half my capital is wiped out (underlying loans I have financed drop in value by 7.5%) that will consummately reduce what I can borrow from 'parent bank' to $450,000. And it also means that I will have to reduce my loan book size to $3.333m in quick time, while paying half of that debenture money back early.

This is starting to sound potentially 'very messy'. An 'underlying gearing ratio' of 90% could see 'Snoopy Finance Limited' wiped out in even a mild market downturn. The secret to survival would be to keep a careful track of some of those other banking covenants. Namely:

BC3/ EBIT to Interest Expense ratio: This will ensure a decent profit margin on the 'Snoopy Finance ' lending.
BC5/ Customer Concentration Test: This will ensure not too many loans are correlated together with respect to risk.
BC6/ Liquidity Buffer ratio aka 'Meads Test': This will ensure there is a good turnover of loans so that debenture holders can be repaid early if market circumstances demand it.

I am really surprised that most parent banks would be happy to write 'Snoopy Finance Limited ' a $900,000 loan facility from day 1. The one way I could see as justification for that is if there were enough other controls on those loans to reduce the chances of 'Snoopy Finance Limited' going off the rails. The main risk I see here is banks lending too much money to me, not too little. The underlying gearing ratio of <90% is to safeguard the parent bank's interests, not mine. Parent banks have little concern for the shareholders of the companies they loan to. As long as the parent bank can get its money back in a downturn, the shareholders of 'Snoopy Finance Limited' can get stuffed. Could this be the reason that second tier finance companies (like Heartland) tend to meet this covenant standard quite easily, because they care very much about looking after their own shareholders?

Despite all this, there is one tiny flaw in this 'Snoopy Finance Limited' business plan though. I don't own a $1m freehold house in Auckland :-(.

SNOOPY

[Beagle]

There's the rates, repairs and maintenance and cleaning of one's oversized Mcmansion, all of which are not much fun and house prices have stopped going up in Auckland...feel a bit better now Snoopy ?

[Snoopy]

Updating for the full year result FY2017:

The EBIT figure is not in the financial statements. So I will use 'interest income' as an indicator for EBIT, once I have taken out the selling and administration costs

EBIT (high estimate) = $278.279m - $71.684m= $206.595m

Interest expense is listed as $115.169m.

So (EBIT)/(Interest Expense)= ($206.595m)/($115.169m)= 1.79 > 1.20

Result: PASS TEST

The historical picture of this ratio is tabulated below. Despite the shakey start, the trend remains very pleasing.



FY2012FY2013FY2014FY2015FY2016FY2017Target

[
EBIT/ Interest Expense1.151.221.441.521.651.79
>1.2





This is an assessment method of looking at the underlying earning power of Heartland, compared to the interest bill they face while making their earnings. Updating for the full year result FY2018:

The EBIT figure is not in the financial statements. So I will use 'interest income' as an indicator for EBIT, once I have taken out the selling and administration costs

EBIT (high estimate) = $309.284m - $80.433m= $228.851m

Interest expense is listed as $125.483m.

So (EBIT)/(Interest Expense)= ($228.851m)/($125.483m)= 1.82 > 1.20

Result: PASS TEST

The historical picture of this ratio is tabulated below. It looks to be getting better and better.


FY2012FY2013FY2014FY2015FY2016
FY2017FY2018
Target

[
EBIT/ Interest Expense1.151.221.441.521.65
1.791.82
>1.2



SNOOPY

[Snoopy]

(EBIT)/(Interest Expense) > 1.20


To assess underlying earning power, I can see a few potential problems with this statistic.

1/ EBIT leaves out tax. Yet apart from a strategy of reducing your income, it is almost impossible to avoid paying more income tax. My preference is to use a standardised tax rate rather than leave it out. I feel this is a better measure of operating performance between reporting periods while keeping earnings figures more realistic.

2/ 'Interest Expense' leaves out all the other expenses. What about the employee wage bill, cost of holding inventory to sell, and the cost of maintaining a retail footprint? These are real expenses that are needed when conducting business every day. So why leave them out of any comparative statistic? I guess one reason is, as an upstream lender to a said company, 'interest expense' is the one expense you can control. But isn't reducing 'other expenses' an equally valid way of sorting out your business profitability as reducing interest rates paid?

3/ The 'I' in EBIT represents interest payable in the running of the business. I have never seen a business that borrows money and doesn't pay any interest on that money. So I have difficulty with the logic of assessing income while leaving out the associated interest bill. Divide one dollar amount by another and you will get a dimensionless ratio. Dimensionless ratios are often good for comparative purposes. The 'Interest Expense' we are dividing by in this statistic is exactly the same 'I' that appears in EBIT. Except that the algebra doesn't quite work this way. EBIT means earnings before interest and tax. So the interest bill isn't there to divide and normalise out of the equation when the arithmetic division is done. I think NPAT/I would be a better measure which would genuinely remove operational sensitivity to interest rates.

A not fully gruntled,

SNOOPY

.....who will nevertheless continue to look at EBIT/I, because this is what the parent banks do.

[Leftfield]

Here's a link to the latest release to an Asian Investors conference from Heartland FYI

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/325496/288836.pdf

Disc; Have taken an small holding in recent lows.

[percy]

Here's a link to the latest release to an Asian Investors conference from Heartland FYI

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/325496/288836.pdf

Disc; Have taken an small holding in recent lows.

Thank you for the link.
Another excellent presentation.

[winner69]

LOL thanks Peat, such a memorable pendant...looks like something KW would wear :) Yes mate as you suggest things do overshoot in both directions but I suspect if it does get down to $1.40 there will be plenty of other things to worry about as well so that's not something I want to see.


Chart looking uglier as the weeks go by (even the pendant is losing its shine)


I dont believe in H&S charts but this one looks pretty convincing. No $1.40 will never be reached ...will it?


Or maybe Heartland just been grouped in with all those dodgy Aussie banks and finance companies which are seen as rogues and vagabonds and not wanted. Even that great company FXL shareprice is collapsing to the chagrin of t_j). Not saying Heartland is dodgy.

[Beagle]

I blame Herdlicker…for everything lol.
The whole market was fine until she set a (new low) wild west tone to it.
Now the whole market is just plain UGLY.

[winner69]

I blame Herdlicker…for everything lol.
The whole market was fine until she set a (new low) wild west tone to it.

Its Hrdlicka by the way ....show some respect please

No doubt Jayne gets to chat with Heartland Directors Vanessa and Ellie quite often in their pursuit of more diversity in business.


Would be good if Jeff told Geoffrey to headhunt Jayne for the Heartland board

Small world eh

[oldtech]

I sold about 30% of my (relatively small) holding on Tuesday, but thought I would hold onto the rest to see what happened.

Now seriously considering dumping those as well! I'm still in the green - just - but I think I could find somewhere better for that money to sit.

[Snoopy]

In April 2017, Heartland had a subordinated capital note issue of $A20m. Approximately 72% of the face value of the Notes will be recognised as Tier 2 Capital by our banking regulators. So we must add the 'Tier 1 capital' (being shareholder equity) to 72% of the 'Tier 2 capital' to obtain the total recognised 'tier' capital for liquidity purposes



Total Heartland Equity at balance date was$569.595m, PLUS


Tier 2 capital as apportioned $14.975m EQUALS


Total Tier Capital $584.570m



Total Heartland liabilities at balance date were $3,465.076m

So: Equity / Total Liabilities
= $584.570m / $3,465.076m = 16.9% < 17% (*)

Result: PASS TEST

I have been a little generous in 'passing' Heartland here, because I am not convinced that using 'only' 72% of the Tier 2 capital is justified (if 100% of Tier 2 capital was used the 17% pass figure would be achieved). I have also included 'intangible assets' as equity. This is because a financial institution is 'punished' for spending on having up to date computer software (software is an intangible asset), when I see up to date software as a really good idea in keeping track of troublesome loans. Nevertheless, whether you agree with my reasoning or not, no one can dispute that Heartland was in a better loan security position at EOFY2017, than at the end of the previous two financial years.

{Note that I have changed my equity target for Heartland to the 17% equity (down from my 20% target) that Heartland had when Governor Wheeler originally approved Heartland as a bank. I had previously used 20% as the figure appropriate for a more marginal finance company without a strong history.}

The historical picture of this ratio is tabulated below.



FY2012FY2013FY2014FY2015FY2016FY2017Target

[
Total Tier Capital/ Loan Book19.3%17.7%17.6%16.6%16.4%16.9%>17%





This is an assessment of Heartland's total liabilities/borrowings (including the accumulated funds looked after for Mum and Dad's known as term deposits) in relation to Heartland's own underlying assets.

In April 2017, Heartland had a subordinated capital note issue of $A20m. Approximately 72% of the face value of the Notes will be recognised as Tier 2 Capital by our banking regulators. So we must add the 'Tier 1 capital' (being shareholder equity) to 72% of the 'Tier 2 capital' to obtain the total recognised 'tier' capital for liquidity purposes



Total Heartland Equity at balance date was$664.160m, PLUS


Tier 2 capital as apportioned (NZD1 = AUD0.9138)$15.758m EQUALS


Total Tier Capital $679.918m



Total Heartland liabilities at balance date were $3,831.766m

So: Equity / Total Liabilities
= $679.918m / $3,831.766m = 17.7% > 17%

Result: PASS TEST

I have been a little generous compared to what the reserve bank might do, in including 'intangible assets' as 'underlying equity'. The Reserve bank effectively punishes a financial institution for spending on having up to date computer software (software is an intangible asset). Yet I see up to date software as a really good idea in keeping track of troublesome loans. Nevertheless, whether you agree with my reasoning or not, no one can dispute that Heartland was in a better loan security position at EOFY2018, than at the end of the previous three financial years.

{Note that I have changed my equity target for Heartland to the 17% equity (down from my 20% target) that Heartland had when former Reserve Bank Governor Wheeler originally approved Heartland as a bank. I had previously used 20% as the figure appropriate for a more marginal finance company without a strong history.}

The historical picture of this ratio is tabulated below.



FY2012FY2013FY2014FY2015FY2016
FY2017FY2018
Target

[
Total Tier Capital/ Loan Book19.3%17.7%17.6%16.6%16.4%
16.9%17.7%
>17%



SNOOPY

[percy]

Heartland have received the final court orders for their restructure.
All going as expected.
No surprises there.
New code on 1st Nov will be HGH.

[Joshuatree]

Cool thanks percy and snoopy, happy holder here. cheers with the sun shining a Gin and tangelo juice in my hand.

[ziggy415]

Snoopy, under the restructure I think the aussie notes are paid back.....what this means I'm not sure...read it in the restructure booklet I think

[RGR367]

All good. Added some more at 160. Hoping that was the lowest from now on.

[ziggy415]

All good. Added some more at 160. Hoping that was the lowest from now on.
Even snoopy must have his finger on the trigger at that price...no wait...$1.45 was his price, getting close

[Bobdn]

Cool thanks percy and snoopy, happy holder here. cheers with the sun shining a Gin and tangelo juice in my hand.

Gin and Juice? A shout out to Snoopy? Can't be a coincidence.

https://www.youtube.com/watch?v=DI3yXg-sX5c

[Beagle]

Even snoopy must have his finger on the trigger at that price...no wait...$1.45 was his price, getting close

It could get there. Stranger things have happened in a market correction. Pleased I reduced at $1.73 ex divvy.

[Joshuatree]

Gin and Juice? A shout out to Snoopy? Can't be a coincidence.

https://www.youtube.com/watch?v=DI3yXg-sX5c

You watch it , small things amuse...., i will enjoy my TGIF drink, Salud.

[BlackPeter]

Its Hrdlicka by the way ....show some respect please

No doubt Jayne gets to chat with Heartland Directors Vanessa and Ellie quite often in their pursuit of more diversity in business.


Would be good if Jeff told Geoffrey to headhunt Jayne for the Heartland board

Small world eh

I suppose you are not holding :);?

[winner69]

I suppose you are not holding :);?

Unfortunately I still hold some free ones (wasn't as clever as beagle) ....hence my passion for the company

But with profits growing and those dividends increasing there's no need to worry

[Beagle]

Joe would make a fantastic addition to the board to boost the diversity even further http://www.scoop.co.nz/stories/BU1810/S00549/accountant-recognised-as-emerging-director-of-clear-vision.htm.

I still have some so I wasn't all that clever. Waiting for that $1.40 you promised me Winner and then I'll pounce back in deeper.

[janner]

Worth a look.

https://youtu.be/8FT-zyTX2nE

[100101]

Is taking a bit of hammering today, cant keep topping up for ever even at $1.50

[macduffy]

Is taking a bit of hammering today, cant keep topping up for ever even at $1.50

Be careful out there! Everything's taking a hammering today!

:mellow:

[Jim]

Be careful out there! Everything's taking a hammering today!

:mellow:

Might top up some tomorrow if it taking a hammering

[winner69]

Might top up some tomorrow if it taking a hammering

Hope no market disasters next week as can’t sell

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/325813/289220.pdf

Farewell Heartland Bank ...you have done us proud

Heartland Group sounds far more important and the name better reflects its real purpose in being a finance company

Might not get tarnished anymore with that horrible ‘bank’ label and association with those dodgy banks .....good timing

[oldtech]

Will be interesting to see the market reaction ... hopefully come the 1st of November the long, gradual slide from $2.14 in January to $1.52 will change around ...

Hope springs eternal.

[peat]

Hope no market disasters next week as can’t sell

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/325813/289220.pdf



yes an unfortunate period to abandon liquidity

[percy]

yes an unfortunate period to abandon liquidity

If in doubt,sell today.!...

[BlackPeter]

Hope no market disasters next week as can’t sell

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/325813/289220.pdf

Farewell Heartland Bank ...you have done us proud

Heartland Group sounds far more important and the name better reflects its real purpose in being a finance company

Might not get tarnished anymore with that horrible ‘bank’ label and association with those dodgy banks .....good timing

Well, yes - however I always wonder why companies and stock exchanges are always happy to waste share holders time and money for renaming and ticker changes.

Why couldn't they keep the existing ticker, prepare all the legal stuff and just change on the push of a button the ownership of HBL - Heartland Bank Ltd to HBL - Heartland's Business Group Ltd?

This company is - for no good reason - wasting shareholder resources as well as time and effort of everybody else monitoring the stock market. Just imagine all these broken trend charts and databases these geni***es are creating and we will need to deal with. Not to mention changing all their stationary, PR material, IT systems and their business cards. Not flash - they do deserve their SP to tank!

[percy]

Well, yes - however I always wonder why companies and stock exchanges are always happy to waste share holders time and money for renaming and ticker changes.

Why couldn't they keep the existing ticker, prepare all the legal stuff and just change on the push of a button the ownership of HBL - Heartland Bank Ltd to HBL - Heartland's Business Group Ltd?

This company is - for no good reason - wasting shareholder resources as well as time and effort of everybody else monitoring the stock market. Just imagine all these broken trend charts and databses these geni**es are creating and we will need to deal with. Not flash - they do deserve their SP to tank!

Yeah right.?..!..lol.
Sell today.!

[BlackPeter]

Yeah right.?..!..lol.
Sell today.!

Don't hold ...

[winner69]

Well, yes - however I always wonder why companies and stock exchanges are always happy to waste share holders time and money for renaming and ticker changes.

Why couldn't they keep the existing ticker, prepare all the legal stuff and just change on the push of a button the ownership of HBL - Heartland Bank Ltd to HBL - Heartland's Business Group Ltd?

This company is - for no good reason - wasting shareholder resources as well as time and effort of everybody else monitoring the stock market. Just imagine all these broken trend charts and databases these geni***es are creating and we will need to deal with. Not to mention changing all their stationary, PR material, IT systems and their business cards. Not flash - they do deserve their SP to tank!

Heartland Group Holdings Ltd is acquiring Heartland Bank Ltd that’s why

[BlackPeter]

Heartland Group Holdings Ltd is acquiring Heartland Bank Ltd that’s why

... and why exactly do they need to change the ticker and halt the trade for three days?

It is quite easy to sell and acquire shares with the push of one button ... and it is not unheard of that even new companies take over existing tickers - even if they have nothing to do with the previous ticker owners. How hard would it have been in the case of Heartland?

Just a bunch of selfserving time and money wasters - and the fact that others are as wasteful (like TNR - TRA) does not excuse them.

[percy]

... and why exactly do they need to change the ticker and halt the trade for three days?

It is quite easy to sell and acquire shares with the push of one button ... and it is not unheard of that even new companies take over existing tickers - even if they have nothing to do with the previous ticker owners. How hard would it have been in the case of Heartland?

Just a bunch of selfserving time and money wasters - and the fact that others are as wasteful (like TNR - TRA) does not excuse them.

Get out of bed on the wrong side this morning.?...lol.

[winner69]

Get out of bed on the wrong side this morning.?...lol.

Was thinking the same mate ....or he's really suffering from the recent collapse in many share prices and taking his frustration out on all in sundry

[iceman]

Do we know what the new ticker will be ? I think that will be the 4th ticker since I first bought this stock :confused:

[winner69]

Do we know what the new ticker will be ? I think that will be the 4th ticker since I first bought this stock :confused:

HIH ...whoops not that dog ......think they said HGH here and ASX

Short for High ....good sign

[iceman]

Jeez winner. Heartland Group and HGH. People may think we're in the cannabis business. May lift the price a bit

[peat]

..think they said HGH here and ASX

Short for High ....good sign

When I first saw it I thought HGH was short for HUGE!

[percy]

HIH ...whoops not that dog ......think they said HGH here and ASX

Short for High ....good sign

$5.00 here we come.? HGH Heartland,Go,Higher.
I think I will enjoy the high.

[BlackPeter]

Get out of bed on the wrong side this morning.?...lol.


Was thinking the same mate ....or he's really suffering from the recent collapse in many share prices and taking his frustration out on all in sundry


HIH ...whoops not that dog ......think they said HGH here and ASX

Short for High ....good sign


$5.00 here we come.? HGH Heartland,Go,Higher.
I think I will enjoy the high.

Well, I am glad that you guys enjoyed the name and ticker change ... this must make it all worthwhile, doesn't it?

And yes, while I know that this is what mangement enjoys - setting themselves a monument by re-branding, re-naming or retickering - could I count many more examples where the only outcome of such an exercise was additional cost rather than gains.

But yes - I agree, in the overall picture is this a well managed company and the cost are relatively low (even if the payback is Zero) - must give the management some leeway to leave their mark.

And obviously - I should have considered percy's attachment to the stock ... I herewith withdraw and appologize for any excitement caused ...

[peat]

Well, I am glad that you guys enjoyed the name and ticker change ... this must make it all worthwhile, doesn't it?


But the really big question is are we going to start a new thread or modify the existing one?

[winner69]

But the really big question is are we going to start a new thread or modify the existing one?

Should go the Black Peter way ...save a lot of stupid effort and just change the thread title

Easy job for Scotty or Admin

[ziggy415]

But the really big question is are we going to start a new thread or modify the existing one?
The really big question is why the restructure in the first place......free trips to aussie for directors maybe.....or is it the chance to buy a reverse mortgage from one of the two or both of macquarry or bank west that have stopped issuing new reverse loans to its customers

[Scrunch]

The really big question is why the restructure in the first place......free trips to aussie for directors maybe.....or is it the chance to buy a reverse mortgage from one of the two or both of macquarry or bank west that have stopped issuing new reverse loans to its customers

Or is it so that the new ticket code doesn't have the history of collapsing from $2.10ish down to $1.50ish returning to where it was two years ago.

[peat]

yeh if Scotty is around then he could do it or indeed the admin

So I thought it was pretty clear why they restructured and fully explained within the thread...essentially - from my recall - so that they can grow the Australian reverse mortgage without the restraints of supervision.

[ziggy415]

yeh if Scotty is around then he could do it or indeed the admin

So I thought it was pretty clear why they restructured and fully explained within the thread...essentially - from my recall - so that they can grow the Australian reverse mortgage without the restraints of supervision.
Organic growth may be a bit slower with aussie govt. Providing reverse mortgages all be it as a weekly payment and the property market slowing hence the buying of reverse mortgage book from other providers may have been what pushed them outside the reserve bank overseas investment rules

[SCOTTY]

No problem. Will contact Admin and ask to have the thread changed to Heartland Group Holdings Ltd.

Topped up today @ $1.54. Great yield- 5.84% net :)

[Beagle]

Or is it so that the new ticket code doesn't have the history of collapsing from $2.10ish down to $1.50ish returning to where it was two years ago.

Sad but true. Just had a look at the 2 year chart and you're dead right. Actually the shape of the chart bears a startling resemblance to the shape of Mt Taranaki. https://www.bing.com/images/search?q=mt+taranaki&id=B87FED4C51630AA89C9442ED64CAE928F61CB4E5&FORM=IQFRBA maybe because Mt Taranaki is heartland N.Z. or perhaps because it got a LONG way ahead of itself at the summit at $2.14.

[horus1]

Bought more at 1.54 Very cheap

[Leftfield]

Bought more at 1.54 Very cheap

Could get worse before it gets better. TA not encouraging, very much in a 'down trend'. Take care.

[winner69]

Sad but true. Just had a look at the 2 year chart and you're dead right. Actually the shape of the chart bears a startling resemblance to the shape of Mt Taranaki. https://www.bing.com/images/search?q=mt+taranaki&id=B87FED4C51630AA89C9442ED64CAE928F61CB4E5&FORM=IQFRBA maybe because Mt Taranaki is heartland N.Z. or perhaps because it got a LONG way ahead of itself at the summit at $2.14.

Just as well some sites bring bring the history so we will see the complete head and shoulders with HGH at 130/140

[Snoopy]

Maybe I’m the zonc but I don’t get this bit at all — I got a sudden brain zonc during the day. Tax will be due on this subordinated capital note.


I never resolved this issue to my satisfaction, but the following RBNZ discussion paper hints at the answer

https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Policy-development/Banks/Review-capital-adequacy-framework-for-registered-banks/Capital-review-paper-what-should-qualify-as-capital.pdf?la=en

------

102. An important aspect of the regime is recognition that tax liabilities may arise for banks when contingent debt becomes loss absorbing. BS2B and BS2A require banks to accurately estimate any potential tax liabilities associated with instruments they report as capital and to deduct any potential tax liabilities from the face value when they report the value of a capital instrument (this deduction is called the regulatory “tax haircut”).

103. Given the company tax rate in New Zealand is currently 28%, the regulatory “tax haircut” is a significant consideration for issuing banks. It appears the requirement to recognise any potential tax liabilities may not always have been fully complied with in practice. This issue is discussed in more detail later in the Paper.

------

Tier 2 capital is one example of 'contingent debt liability'.
The key words in the two paragraphs painted above are 'may arise'. It seems the RBNZ doesn't know for sure, so best to be conservative and assume they 'will arise'.

------

203. It is important that the capital values reported by banks are accurate. If a capital instrument is likely to impose a tax liability on the issuing bank, at the time the instrument absorbs losses, the value available to absorb losses will be reduced. Hence, any potential IRD claims on the bank of this nature should be taken into account when reporting capital values.

204. The current regime requires banks to accurately estimate and deduct any potential tax liabilities arising at the point a capital instrument absorbs bank losses. If banks wish to report the full value of a contingent debt instrument, currently they must acquire a binding tax ruling from the IRD.

205. Some banks have raised matters of interpretation of the requirements, arguing that a less conservative interpretation than the stated policy intent is possible. Perhaps for this reason, some banks may have requested less than comprehensive rulings, and have thus potentially overlooked relevant tax effects.

-------

The above 'seems to be saying' that if Tier 2 debt is used to absorb bank losses the IRD may claim some of that bond as 'tax due'. However, since the bank would likely be in some trouble if Tier 2 capital was 'called in', I do not understand why, faced with huge losses, the bank would still be subject to any tax due if it had got to an emergency bail out situation.

-------

222. Tax considerations appear likely to feature prominently as a part of the decision by some banks to issue contingent debt. The proposals covered in this paper would exclude contingent debt from Tier 1 capital and, limit Tier 2 capital to subordinated debt that has, at most, only write off triggered by a non-viability event.

-------

One way or the other, it seems all this will be 'decided' by the RBNZ by 1st January.

SNOOPY

[Leftfield]

I've been enjoying your analysis of HBL/HBH Snoopy. Your F/A analysis is v helpful, however, I suspect T/A sentiment is currently against most NZ/AUS banks and this does not help HBL - as this article notes;
https://www.abc.net.au/news/2018-10-27/banks-face-another-rough-reporting-season-years-underperforming/10432542?section=business

[percy]

I wonder whether having the dirty word "bank" out of their name,ie Heartland Group Holdings,will make a difference.

[winner69]

I wonder whether having the dirty word "bank" out of their name,ie Heartland Group Holdings,will make a difference.

Maybe but then many finance companies are seen as really dodgy as well and share prices down as well .....like Flexigroup and those payday lenders

Didn’t being a (de facto) bank give them credibility and helped underpin the share price?

[Beagle]

I wonder whether having the dirty word "bank" out of their name,ie Heartland Group Holdings,will make a difference.

Hasn't done much good for Summerset Group Holdings Limited lately but who knows this week might be different.

All aboard, this weeks roller coaster market ride is about to commence. Wonder how much I will lose this week ?

[Aaron]

I wonder whether having the dirty word "bank" out of their name,ie Heartland Group Holdings,will make a difference.

Probably "Bank" rates better than "Finance Company" at least if you are a shareholder or debenture holder in NZ. Heartland seems to be a go to bank for rural finance although these are riskier borrowers who have been declined by the major banks but heartland also charges a higher interest rate.
Disclaimer; These statements are not based on facts but personal anecdotal evidence from a very limited sample.

[winner69]

Hasn't done much good for Summerset Group Holdings Limited lately but who knows this week might be different.

All aboard, this weeks roller coaster market ride is about to commence. Wonder how much I will lose this week ?

Cheer up ....just think of those dividends

Not good for your health checking your net worth every day/week .....just do it once a year if you must

[Beagle]

Cheer up ....just think of those dividends

Not good for your health checking your net worth every day/week .....just do it once a year if you must

Thanks, I tend to agree but you have set the bar too high. Moving to monthly, (instead of weekly) portfolio net worth updates would be a good start for me but I might try for quarterly this quarter seeing as there's so much pain this month lol

[percy]

I have a good laugh.
Look each day to see if I have any green.
Only green I have is my very small holdings.
VHT [thanks KW] brought with a little bit of leftover funds, is going gang buster.Brought at au90 cents ,now up to au$1.40.
Looking forward to TRA's fat divie tomorrow night.

[percy]

Probably "Bank" rates better than "Finance Company" at least if you are a shareholder or debenture holder in NZ. Heartland seems to be a go to bank for rural finance although these are riskier borrowers who have been declined by the major banks but heartland also charges a higher interest rate.
Disclaimer; These statements are not based on facts but personal anecdotal evidence from a very limited sample.

Best to read one of their presentations,or their annual report,then you will know the "facts"..

[RTM]

Hasn't done much good for Summerset Group Holdings Limited lately but who knows this week might be different.

All aboard, this weeks roller coaster market ride is about to commence. Wonder how much I will lose this week ?

You won't lose anything if you don't sell.

[couta1]

Thanks, I tend to agree but you have set the bar too high. Moving to monthly, (instead of weekly) portfolio net worth updates would be a good start for me but I might try for quarterly this quarter seeing as there's so much pain this month lol I myself prefer live updates all the time.PS-My motto is feel the pain but do it anyway.Lol

[percy]

I myself prefer live updates all the time.PS-My motto is feel the pain but do it anyway.Lol

Thank you for another one of your "classics".
Helps to keep me sane.!

[Beagle]

I myself prefer live updates all the time.PS-My motto is feel the pain but do it anyway.Lol

Whatever happy meds you're on can I please have some lol

[minimoke]

.... but who knows this week might be different.

All aboard, this weeks roller coaster market ride is about to commence. Wonder how much I will lose this week ?
Shirt has gone. I'm down to underpants and socks so hoping for a better week because that is simply more than unpleasant!

[minimoke]

Thanks, I tend to agree but you have set the bar too high. Moving to monthly, (instead of weekly) portfolio net worth updates would be a good start for me but I might try for quarterly this quarter seeing as there's so much pain this month lolI do mine on a monthly basis on COB on the 1st of each month. Doesnt stop me looking each day though.

[percy]

Shirt has gone. I'm down to underpants and socks so hoping for a better week because that is simply more than unpleasant!

Time to renew your "Pineglades Naturist Club" membership....lol.

[percy]

From Craigs research today.
"Owning shares in quality businesses that pay growing dividends remains an excellent strategy for wealth creation,not to mention inflation protection.While disconcerning periods of volatilty and weakness are simply the price we pay for superior long term returns."

[Beagle]

Shirt has gone. I'm down to underpants and socks so hoping for a better week because that is simply more than unpleasant!

Ummmm...how do I get that image out of my head lol. Suppose we should move the bleating to the black Monday thread. Actually speaking of that I just posted something interesting in there.
If this is a garden variety correction (which averages 13% since world war 2), we are most of the way through the pain already so hopefully just the socks to go and that's it ! (trying to keep my sense of humour because lets be honest, we've all had a **** month and are in the same boat).

Yes that's a timely reminder from Craigs.
Assuming they put up the dividend by half a cent this year to 9.5 cps fully imputed at $1.54 the gross yield is 8.57%.
Just a "little" better than you get with Heartland investing on the fixed interest side of the ledger.

[janner]

" just the socks to go and that's it "

What then ??. Off to the showers ...

[minimoke]

" just the socks to go and that's it "

What then ??. Off to the showers ...I'm about to google "how to sell body parts"

[peat]

I'm about to google "how to sell body parts"

HGH could = Human Growth Hormone , for those wanting to incorporate those body parts.

at least if there are market gyrations during the next few days HBL holders wont have minute by minute updates on price.

[peat]

No IPO of UDC.

https://www.asx.com.au/asxpdf/20181031/pdf/43ztfl9k05dy4r.pdf


very interesting timing for this to come out!

[Beagle]

What happened to other posts in this thread this morning ?

[peat]

What happened to other posts in this thread this morning ?

are you thinking of the UDC thread perhaps?
I reposted macduffy's post into this thread from the UDC thread

[Beagle]

are you thinking of the UDC thread perhaps?
I reposted macduffy's post into this thread from the UDC thread

Thanks, silly old dog I am sometimes lol

[minimoke]

Holy fvck. Just got the fright of my life.

ANZ's Direct Broking site went down. When I turned it back on my account is in Red territory. Missing mega bucks. Sh1te!!.

Took a breath and then realise HBL had disappeared. only to be replaced by HGH with no market value attributed to HGH.

Phew (i'm presuming it wil update in the morning - though I cant see why last sale prices hasnt been brought through)

[Beagle]

Holy fvck. Just got the fright of my life.

ANZ's Direct Broking site went down. When I turned it back on my account is in Red territory. Missing mega bucks. Sh1te!!.

Took a breath and then realise HBL had disappeared. only to be replaced by HGH with no market value attributed to HGH.

Phew (i'm presuming it wil update in the morning - though I cant see why last sale prices hasnt been brought through)
Relax...just like your mum told you when you were little, everything will be alright in the morning :)
HGH to open at $1.60+ tomorrow morning now that the risk of an oversized UDC acquisition and all that would have involved, is no longer a concern.

[minimoke]

Relax...just like your mum told you when you were little, everything will be alright in the morning :)
HGH to open at $1.60+ tomorrow morning now that the risk of an oversized UDC acquisition and all that would have involved, is no longer a concern.No thanks, I should be good. just checked my Heart Rate Monitor. It spiked at 280 BPM (wee exaggeration!) but now back down to 47 BPM

$1.60 + might be right. The advantage with being off market for a few days then missed the tail end of the slaughter, market has had a breather and starting to grow again, Should be a good notch above last close of $1.54

(just as well I do my accounts on COB on the 1st of the month. Doing them tonight would be ugly)

[Beagle]

That's good mate as I'm running low on them anyway after such a brutal month. I will rather "conveniently" skip doing an end of month portfolio revaluation this month and get back to pleasant walks in the sun. Sometimes creative accounting is useful isn't it :)

[Bobdn]

Just did my networth update. Haven't missed one since March 2009 - worst month ever for actual dollars lost, second worst in percentage terms. Best to pull the band-aid off quickly with these things.

Looking forward to HGH coming on stream.

[blockhead]

Did the same myself Mini, got such a shock I thought I better stem the hole so bought 40,000 NZO (took money out of Heartland Bank) just to make it look level again, never know when Mrs Blocky might press the "My Portfolio" button, there would be an enquiry if net worth had plummeted by $30k or so . Will look sweet tomorrow with HGH and NZO in there

[minimoke]

Just did my networth update. Haven't missed one since March 2009 - worst month ever for actual dollars lost, second worst in percentage terms. Best to pull the band-aid off quickly with these things.

Looking forward to HGH coming on stream.
My update will be done tomorrow. Been doing it since 1996. I'm going to be down about 0.01% for the month. Sets me back a smidge on last month which was an all time high.

[Baa_Baa]

My update will be done tomorrow. Been doing it since 1996. I'm going to be down about 0.01% for the month. Sets me back a smidge on last month which was an all time high.

Down only 0.01% for the month and you're whining about losing your shirt and most of your clothes. Hard to take you seriously.

[minimoke]

Down only 0.01% for the month and you're whining about losing your shirt and most of your clothes. Hard to take you seriously.
This is a share trading forum. So when I talk express my grief last week about loosing my shirt i am talking about shares ("whining" - how rude of you!). Shares arent the only place I have assets. You might have missed the rebound in shares over the past three days as well.

[percy]

Nice seeing a bit of meat in HGH's sp price on 'World Vegan Day".

And director Greg Tomlinson retains plenty "of skin in the game" holding 53.975,036 shares...9.546%.

[minimoke]

Down only 0.01% for the month and you're whining about losing your shirt and most of your clothes. Hard to take you seriously.Actually ended up 0.21% on the month - what a difference a few days in the market makes!. Pays not to have all eggs in one equity basket.

[dabsman]

Somewhat annoying having to move all my HBL holding to HGH in tracking software/websites etc...

[iceman]

Somewhat annoying having to move all my HBL holding to HGH in tracking software/websites etc...

Not sure which software you are using. I contacted Sharesight and thought others may be interested in their response on how to do this in the easiest way. Unfortunately the history does not move across to HGH :-(

"Hi , sorry for the late reply. What you can do is to go into HBL holding page, on the right sidebar, open Holding Settings, select Merge this holding, search HGH and hit save. This should move it across. All the previous buy info and dividend history will still be kept in the portfolio under HBL. "

[Cricketfan]

Not sure which software you are using. I contacted Sharesight and thought others may be interested in their response on how to do this in the easiest way. Unfortunately the history does not move across to HGH :-(

"Hi , sorry for the late reply. What you can do is to go into HBL holding page, on the right sidebar, open Holding Settings, select Merge this holding, search HGH and hit save. This should move it across. All the previous buy info and dividend history will still be kept in the portfolio under HBL. "

Hmm, I just did this but it doesn't seem to have retained any history, and the returns have been reset to 0%. You'd think this would be handled better..... oh well..

[percy]

Slightly off topic sorry but I have just sold a property and need somewhere to park the funds while I wait for another property to come up. Might be next week might be in a few months or even a few years away. Have looked at term deposits and the rates are sooo depressing. :( Heartland appears to have some of the best and I wondered if anyone uses them to park their money. I am very tempted to put a chunk into some “defensive” shares given interest rates are so horrible but in the current climate and given I may need to access the money within a short time period it is probably more “sensible” to park it in a bank. Be grateful to know where people park their spare money. Thanks in advance

Put your "property" money on deposit.
The money made on property is made in the buying,so you need your funds on hand.
Remember the old sharemarket saying;"A long term investment is a short term one that did not work out."

[Benny1]

Hmm, I just did this but it doesn't seem to have retained any history, and the returns have been reset to 0%. You'd think this would be handled better..... oh well..
Hmm.. Need to look at doing this too... Been a bit busy this week due to a new four legged barking machine joining the household..
Does seem abit of a pain in the arse ..think they could come up with a way to automatically move holdings over to the new ticker code... I assume I have to change my portfolio holding over in ASB securities as well manually ? May ask them about it on Monday..

[iceman]

Hmm, I just did this but it doesn't seem to have retained any history, and the returns have been reset to 0%. You'd think this would be handled better..... oh well..

I can find the HBL buy, sell and dividend history still under HBL by searching for it and bring it up. Yes not good that it doesn't just automatically change the ticker and name

[winner69]

I can find the HBL buy, sell and dividend history still under HBL by searching for it and bring it up. Yes not good that it doesn't just automatically change the ticker and name

Third world problems do stress punters out

[Snow Leopard]

The problem is that Heartland Bank (HBL) did not change its name to Heartland whatever it is today (HGH).

Heartland Bank still lives and is the issuer of the HBL010 thingies.

So, correctly, Heartland Gross overHeads (HGH) is a new company and the NZX et al are treating it as such.

Luckily I am master of my own software and have treated it as yet another name change with continuity of data.

[BlackPeter]

Somewhat annoying having to move all my HBL holding to HGH in tracking software/websites etc...


Hmm, I just did this but it doesn't seem to have retained any history, and the returns have been reset to 0%. You'd think this would be handled better..... oh well..

Check with percy and winner - they both told me (when I complained) that HBL's latest name and ticker change is the best thing since the invention of sliced bread ... must triple the share price or something.

I doubt they can help you, but they might be able to cheer you guys up ;);

[winner69]

G
Check with percy and winner - they both told me (when I complained) that HBL's latest name and ticker change is the best thing since the invention of sliced bread ... must triple the share price or something.

I doubt they can help you, but they might be able to cheer you guys up ;);

BP - there’s some things you just don’t get eh

[percy]

Always interesting seeing how much skin directors have in the game.
Greg Tomlinson has $83.66 mil.............
Chairman Geoffrey Ricketts [and mates] $20.56 mil.
Together over $100mil.
Other directors and management also have large holdings.
Growth opportunities in Australia.Yes thank you, we will help ourselves to them.

[Beagle]

Hmm.. Need to look at doing this too... Been a bit busy this week due to a new four legged barking machine joining the household..
Does seem abit of a pain in the arse ..think they could come up with a way to automatically move holdings over to the new ticker code... I assume I have to change my portfolio holding over in ASB securities as well manually ? May ask them about it on Monday..

Get the right one mate and its the ultimate investment. I'm convinced one of my dogs that cost $995 is worth $1m now, but I could be "slightly" biased through emotional attachment ;) Some of the "dividends" Basil leaves on the deck aren't especially rewarding though lol
Not sure what came over me on Friday but I bought a few more of these fancy new group holdings things.

[percy]

Get the right one mate and its the ultimate investment. I'm convinced one of my dogs that cost $995 is worth $1m now, but I could be "slightly" biased through emotional attachment ;) Some of the "dividends" Basil leaves on the deck aren't especially rewarding though lol
Not sure what came over me on Friday but I bought a few more of these fancy new group holdings things.

A moment of profound wisdom.?

[BlackPeter]

G

BP - there’s some things you just don’t get eh

You are probably right. I don't understand everything. Glad though I'm in good company with that problem :D

[minimoke]

Get the right one mate and its the ultimate investment. I'm convinced one of my dogs that cost $995 is worth $1m now,
I think you might be confusing "worth" with "ongoing costs"

[winner69]

Global Dairy Trade prices continue to slide. Whole milk powder down nearly 3%

Prices have been trending down all year with no sign of a turnaround ......just like the Heartland share price

[winner69]

Whole Milk Powder price chart looks like the Heartland share price chart

Up, up and then down down down .....

Spooky as

[Beagle]

Whole Milk Powder price chart looks like the Heartland share price chart

Up, up and then down down down .....

Spooky as

The strength of the correlation between the two that's existed for a very long period of time is quite remarkable. I think its clear the market is telling us that the financial health of dairy farmers really matters to HGH's future prospects.

[winner69]

The strength of the correlation between the two that's existed for a very long period of time is quite remarkable. I think its clear the market is telling us that the financial health of dairy farmers really matters to HGH's future prospects.

From NZ Herald report — Whole milk powder dropped 2.9 per cent to US$2,655 a tonne. That's the lowest price since August 2016, according to NZX dairy analyst Amy Castleton.

Heartland share price hit $1.54 back in August 2016 ......current share price almost ‘the lowest price since August 2016’ as well

Spooky

[winner69]

The strength of the correlation between the two that's existed for a very long period of time is quite remarkable. I think its clear the market is telling us that the financial health of dairy farmers really matters to HGH's future prospects.

Could be because of the name Heartland ......association with heartland NZ and things rural.

Time for a name change .....and a new ticker code

[Timesurfer]

Could be because of the name Heartland ......association with heartland NZ and things rural.

Time for a name change .....and a new ticker code

A little soon for that joke maybe? :p

[BlackPeter]

Could be because of the name Heartland ......association with heartland NZ and things rural.

Time for a name change .....and a new ticker code

You did beat me to that ;) - I guess who wants anyway to hang around for such a long time with such a boring name just associated with share price drops?

Maybe they could try instead something like ROC - Rural Online Capital Supply? or how about WRM - West Island Reverse Mortgages?

Would be one ticker change per month enough to satisfy the fans?

Relax - I still think they are a good company, but their latest name (and particularly ticker-) change just shows how easy it is for even a good company to lose the focus on what's important ...

What they really should focus on is better customer access (including online experience), better customer care and probably better marketing. Ticker changes don't help with any of that.

[minimoke]

From NZ Herald report — Whole milk powder dropped 2.9 per cent to US$2,655 a tonne. That's the lowest price since August 2016, according to NZX dairy analyst Amy Castleton.

Heartland share price hit $1.54 back in August 2016 ......current share price almost ‘the lowest price since August 2016’ as well

SpookyThat was with the old Heartland Bank

If you look at the chart of the shiny new Heartland Group (like on my ANZ Securities account charts) HGH has only dipped from $1.57 to the current $1.55

[percy]

Todays directors and management disclosure notice, just shows how much "skin in the game" they have.
Most reassuring.

[Beagle]

Todays directors and management disclosure notice, just shows how much "skin in the game" they have.
Most reassuring.

I got to thinking with all those HIGH level holdings they might have got the name change wrong and it should have been Highland Group Holdings Limited...sounds a lot more posh doesn't it :)
Actually speaking of things Highland, you got your bagpipes and tartan kilt out and all ready for Saturday Percy ? http://hororatahighlandgames.org.nz/
This Beagle wouldn't mind getting his snout into the Hororata pie eating competition...that sounds like really tasty fun :D
For those of us that can't get down there...Enjoy https://www.youtube.com/watch?v=PSH0eRKq1lE&list=RDQMWEvGN8OgSmg&start_radio=1

[percy]

A great community event.
I am happy with HGH's name.
I think they have their branded themselves well.

[iceman]

Harmoney hits $1 Billion in lending, $ 750 in NZ and rest in Aussie. Interestingly the book is largely to 30-49 yo and skewed towards homeowners (45%) and skilled office workers and professionals (37%). 75% funded by institutional investors. Would be interesting to know how much HGH has lent to them.
https://www.interest.co.nz/news/96775/licensed-p2p-lender-harmoney-says-it-has-facilitated-loans-across-new-zealand-and

[couta1]

This thing acting like a real dog also, if it wasn't for the dividend it would also be out of the kennel.PS-Even with the dividend it might still get the boot.

[percy]

This thing acting like a real dog also, if it wasn't for the dividend it would also be out of the kennel.PS-Even with the dividend it might still get the boot.

You don't sound that happy with your holding.?.....................

[couta1]

You don't sound that happy with your holding.?..................... I'm in a slash and burn mood at the moment, better go fishing for a day where there is no internet coverage.PS-Down 15% on this one.

[minimoke]

This thing acting like a real dog also, if it wasn't for the dividend it would also be out of the kennel.PS-Even with the dividend it might still get the boot.Dividends are not making up for capital erosion. This pig is nearing my stop loss which will get triggered!

[Timesurfer]

I'm in a slash and burn mood at the moment, better go fishing for a day where there is no internet coverage.PS-Down 15% on this one.

At least my 11% isn't as bad, but wishing I'd taken the hit and binned them when I was looking for something to throw at ZEL. Instead I snoozed and just keep losing!

[horus1]

I am holding and adding. Good price to buy.

[Snow Leopard]

The SP is really in the doghouse these days and the over exhuberance of $2.14 so faraway, and yet they have a grand conglomerate name and are listed on a real stock exchange (ASX).

Whilst I still hold a few I kind of regret not selling them all.

But then, a bit more of a drop and it could be buy time.

[winner69]

Q1 profit up 8%

Unusual for Heartland a mistake in their presentation ...page 14

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/327018/290747.pdf

[winner69]

Current market Price to Book value of 1.35 times

Reasonable ......but share price sub 140 still possible to complete that H&S chart pattern

[percy]

HGH's Investor Day Presentation is a must read.Reverse Equity Loans fully explained.
Perhaps a kind poster will post the link here.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/327018/290747.pdf Don't want the Irish housing crisis stress test to play itself out do we Percy :)

SP and whole milk powder price inextricably related so SP will continue to track that :D Seriously though, there is a strange correlation but nonetheless the contents of the investor day presentation at first glace look sound. Disc: Holding for gross yield (assuming they lift dividend this year to 9.5 cps) of (9.5 / 0.72) / 152 = 8.7%.

[forest]

HGH's Investor Day Presentation is a must read.Reverse Equity Loans fully explained.
Perhaps a kind poster will post the link here.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/327018/290747.pdf

[percy]

Thanks Beagle and Forest.
Beagle.Well the Irish situation could see Heartland Bank as the last bank surviving in Australasia.?
Whole milk powder correlation is further weaked with HGH's lower Rural exposure,particulary with their reduction of "larger" loans.

[winner69]

In-depth analysis of Heartland Group

I assume this is mainly for Aussie ‘investors’ .....was the presentation over there?

If so hope they can overcome the Aussie view that you have to be twice as good as any Aussie company to be any good...nobody does things like Aussies eh

Good to see them drumming up support in Australia ..if this was the case.

[percy]

In-depth analysis of Heartland Group

I assume this is mainly for Aussie ‘investors’ .....was the presentation over there?

If so hope they can overcome the Aussie view that you have to be twice as good as any Aussie company to be any good...nobody does things like Aussies eh

Good to see them drumming up support in Australia ..if this was the case.

And I thought it was to help Snoopy understand RELs and HGH's point of difference to the Australian banks.lol

[Beagle]

And I thought it was to help Snoopy understand RELs and HGH's point of difference to the Australian banks.lol

:lol: :lol: Too funny !

[winner69]

The new graphic Heartland Group are using in presos is pretty cool .....captures the essence of being a Group ...good communication ..... and aren't the green (Heartland green of course) doors rather cute

Might be seductive ...but seems to be scaring the punters off ...hopefully not into the 140's this week

[ziggy415]

HGH's Investor Day Presentation is a must read.Reverse Equity Loans fully explained.
Perhaps a kind poster will post the link here.
I see the 20 million Aussie bond issue is being paid back......but hgh went to Aussie to exspand the investor base not diminish it.....so why...cba bank finances hgh reverse mortgages but wants out of the reverse market next January....one plus one equals three...hgh buys cba banks reverse mortgage book and hgh borrows the money from cba
Bank.....failing that they bid for turners lol

[trader_jackson]

The new graphic Heartland Group are using in presos is pretty cool .....captures the essence of being a Group ...good communication ..... and aren't the green (Heartland green of course) doors rather cute

Might be seductive ...but seems to be scaring the punters off ...hopefully not into the 140's this week

It was seductive enough to get me! After being absent from the share registe since April 2017 I decided to take the plunge at $1.50... and it seems I'm already losing money a few hours after buying
Not losing as much as those insto'sthat snapped up shares at $2+ about a year ago...

[couta1]

This and TRA are running neck and neck in the Mutt race to the bottom, sitting on a couple of very large paper losses.PS-Only stocks I'm enjoying at the moment are A2 and HLG, complete opposites in every way yet they have both done me proud.

[oldtech]

Sold out my remaining shareholding this morning (got rid of 30% a month ago at $1.68). A bit sorry to do so, this was one of my first serious investments when I started three years ago, but with the SP showing no signs of slowing it's downward trend it was time to pull the trigger before I got into loss territory.

[Snoopy]

I see the 20 million Aussie bond issue is being paid back......but hgh went to Aussie to expand the investor base not diminish it.....so why...cba bank finances hgh reverse mortgages but wants out of the reverse market next January....one plus one equals three...hgh buys cba banks reverse mortgage book and hgh borrows the money from cba
Bank.....failing that they bid for turners lol


Ziggy, it is 'Heartland Bank' (HBL) that is paying back the $20m Aussie bond. You correctly point out that HGH is on a mission to expand in Australia. Rest assured that the HBL bond will be replaced with an equivalent HGH bond, and further out, yet more HGH bonds. If HGH held bonds in the name of a bank, then the Aussie Reserve bank would want to take a look as would the NZ Reserve bank (because HBL is NZ based). So best to keep everything away from those pesky regulators by getting the word 'bank' out of the bonds. IIRC all this was signalled in the proposed corporate restructuring document that all shareholders voted on.

Where did you see that CBA are pulling out of reverse mortgages in Australia in January? That is sensational news because they are by far the largest player in Reverse Mortages in Australia. I doubt if Heartland (HGH) could buy them out without a significant capital raising. But CBA may elect to keep their existing REL book, and not take on any new business like Westpac did when they exited the REL market IIRC. It could be that CBA , in the future, will act to securitize HGH Reverse mortgages in Australia. That would effectively on sell the REL risk to third parties.

SNOOPY

[iceman]

Ziggy, it is 'Heartland Bank' (HBL) that is paying back the Aussie bond. You correctly point out that HGH is on a mission to expand in Australia. Rest assured that the HBL bond will be replaced with an equivalent HGH bond, and further out, yet more HGH bonds. If HGH held bonds in the name of a bank, then the Aussie Reserve bank would want to take a look as would the NZ Reserve bank (because HBL is NZ based). So best to keep everything away from those pesky regulators by getting the word 'bank' out of the bonds. IIRC all this was signalled in the proposed corporate restricting document that all shareholders voted on.

Where did you see that CBA are pulling out of reverse mortgages in Australia in January? That is sensational news because they are by far the largest player in Reverse Mortages in Australia. I doubt if Heartland (HGH) could buy them out without a significant capital raising. CBA may elect to keep their existing REL book, and not take on any new business like Westpac did IIRC.

SNOOPY

From the investor presentation :
"Competitors exiting – Westpac, Macquarie (both mid 2017), and CBA have announced exit effective 1 January 2019. A few non-major bank competitors remain "

[Jay]

I saw it too re CBA puling out of Reverse Mtges.
Article said will only leave a few small non bank "competitors" or something like that.
Was Stuff or similar, cannot remember and cannot find the actual article I read, but here is one : https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja&uact=8&ved=2ahUKEwjM6Z_K4eHeAhVMcCsKHeoUD3QQFjAEegQIChAB&url=https%3A%2F%2Fwww.afr.com%2Fpersonal-finance%2Fcba-and-bankwest-axe-reverse-mortgages-amid-rising-costs-and-tougher-scrutiny-20181022-h16xqk&usg=AOvVaw3jYC6RXh9fk20MsuvnoVnt

[ziggy415]

I saw it too re CBA puling out of Reverse Mtges.
Article said will only leave a few small non bank "competitors" or something like that.
Was Stuff or similar, cannot remember and cannot find the actual article I read, but here is one : https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja&uact=8&ved=2ahUKEwjM6Z_K4eHeAhVMcCsKHeoUD3QQFjAEegQIChAB&url=https%3A%2F%2Fwww.afr.com%2Fpersonal-finance%2Fcba-and-bankwest-axe-reverse-mortgages-amid-rising-costs-and-tougher-scrutiny-20181022-h16xqk&usg=AOvVaw3jYC6RXh9fk20MsuvnoVnt
Was in the latest quarterly update posted on this thread on th 19th

[ziggy415]

See forest post on 19th

[Beagle]

Current market Price to Book value of 1.35 times

Reasonable ......but share price sub 140 still possible to complete that H&S chart pattern


Those head and shoulders patterns pretty reliable indicators aren't they mate. That, the whole milk powder price and the spooky correlation thereto as well as the significant correction of this sector in Australia all point to a completion of the head and shoulders to just under $1.40. Tough times to be a hgh supporter. Dividend yield should give support, (he says hopefully), in the $1.30's. Hanging in their grimly with a moderate stake at this stage.

[fish]

[QUOTE=Jay;738013]I saw it too re CBA puling out of Reverse Mtges.
Article said will only leave a few small non bank "competitors" or something like that.
Was Stuff or similar, cannot remember and cannot find the actual article I read, but here is one :

The reasons stated are rising costs and risk adverse legislation.
As far as costs go these mainly fall on the lender-in case of Heartland they dont seem to have changed and are probably very low.They currently lend on reverse mortgages at approx 7.8% compounded monthly and borrow at 1/2 that.
Profit margin seems high at what appears to be very low risk-they only lend on a very small percentage of the valuation. The mortgage is terminated if the mortgagee moves-eg into a rest home or to sell down to a smaller home .Average length of mortgage is 7 years.
seems no more risky than a standard mortgage but several times the profit margin.
Hence if Banks are moving out of this market-and I suggest we dont know the real reasons for this -it can only help heartland.
Adverse legislation can affect anything but I cannot see it take away a fundamental freedom to borrow money against a house or anything else

[percy]

Most banks have "process" set up to handle mortgages.You apply for a mortgage and it is approved or declined within a day or two.Simple.
Reverse mortgage "process" takes about a month or more.Applicant needs legal advice,full understanding of the loan,family consultation.Heartland must make sure the applicant understands what happens if they need to move into care,etc,etc..
I think the major banks have decided this "process" is too drawn out for them and possibly not their "core" [simple] business.

[winner69]

Global Dairy Trade auction prices down 3.5% overnight

Decline seen all year continues ...just like Heartlands share price

Outlook for dairy prices apparently not that bright either

Spooky eh, really spooky

[fish]

Thanks Percy.
Banks are also making so much money they dont need to risk adverse publicity if complaints arise from loss of capital when the house is sold.

[Mickey]

The buy spread on HGH looks interesting this morning - 1 at 145 and the next at 128. Possibly a bunch of people sitting on the sideline trying to time the market.

[Beagle]

Global Dairy Trade auction prices down 3.5% overnight

Decline seen all year continues ...just like Heartlands share price

Outlook for dairy prices apparently not that bright either

Spooky eh, really spooky

Really spooky...expecting hgh to come under further pressure today. The 10% gross yield rate arrives on a forecast of 9.5 cps fully imputed = 13.19 cps when the shares hit $1.32. Not saying they will go down that low in due course but stranger things have happened before and this one often overshoots on the high side ($2.14) and the low side.

[winner69]

........as well as the significant correction of this sector in Australia ......

Yes indeed, most OZ financial insto / banks multiples falling and NZ companies are following ......and HGH price/book at 1.35 is still just above sector average

Now being touted as a trans-Tasman Group so one would expect this trend to follow ....and some punters might see HGH as more ‘risky’ than when it was a ‘bank’

[percy]

Yes indeed, most OZ financial insto / banks multiples falling and NZ companies are following ......and HGH price/book at 1.35 is still just above sector average

Now being touted as a trans-Tasman Group so one would expect this trend to follow ....and some punters might see HGH as more ‘risky’ than when it was a ‘bank’

While investors will see it gives HGH greater growth opportunities.
Interesting to know the REL Australian out standing growth is continuing at the same extremely high rate.This growth will underpin HGH's positive outlook,and most probably increasing dividends.

[RTM]

I wonder how much the lack of easy information available on HGH is putting people off ?
When I look at ANZ Sec Details screen there is no dividend or yield showing.
When I try to find it in NZX I get no historical dividends or upcoming dividends.
No P/E, no eps, no NTA.
All the history has been erased with the name change.

Makes it cumbersome to find information. Especially on a scan.


Disc. Holder

[oldtech]

Those head and shoulders patterns pretty reliable indicators aren't they mate. That, the whole milk powder price and the spooky correlation thereto as well as the significant correction of this sector in Australia all point to a completion of the head and shoulders to just under $1.40. Tough times to be a hgh supporter. Dividend yield should give support, (he says hopefully), in the $1.30's. Hanging in their grimly with a moderate stake at this stage.

$1.33 is where I first bought into this November 2015. I'm all out now - with a bit of a tear in my eye, this share had some sentimental attachment being the first share I bought when I started getting serious - but I will continue to watch it's progress. Once the downtrend that's been playing out for many months (confirmed in April by my reading of the charts) turns around I'll reappraise.

[waikare]

I wonder how much the lack of easy information available on HGH is putting people off ?
When I look at ANZ Sec Details screen there is no dividend or yield showing.
When I try to find it in NZX I get no historical dividends or upcoming dividends.
No P/E, no eps, no NTA.
All the history has been erased with the name change.

Makes it cumbersome to find information. Especially on a scan.


Disc. Holder
I also could not find any history, not much had changed apart from the name.

[minimoke]

I also could not find any history, not much had changed apart from the name.A bit frustrating to have lost all that data. Perhaps an unintended consequence of the name change. Or a known outcome.

[BlackPeter]

A bit frustrating to have lost all that data. Perhaps an unintended consequence of the name change. Or a known outcome.

Quite predictable - happens every time some stupid company decides to change their ticker. But given that even some of the guru investors around here loved the change - I guess there must be as well some benefits for HLB/HBL/HGH - maybe it allows them for some time to hide their tracks and the quite significant downtrend they are in?

[percy]

Quite predictable - happens every time some stupid company decides to change their ticker. But given that even some of the guru investors around here loved the change - I guess there must be as well some benefits for HLB/HBL/HGH - maybe it allows them for some time to hide their tracks and the quite significant downtrend they are in?

Got out of bed on the wrong side again?.
I do expect better from you.

[100101]

History is still on HLB last time I looked

[BlackPeter]

Got out of bed on the wrong side again?.
I do expect better from you.

Look percy - I do hold your judgement normally in high regard. Just find it difficult to understand why you are reacting so sensitive on justified criticism of what your beloved HGH (or whatever board) might have done - even if it is just a nuisance to some investors, it was unnecessary.

And just to make sure - I am not talking about the restructure (which clearly has benefits as well as risks), I am just talking about their need to change their ticker - again - and with that basically erase their (easy to access) history for the investor community.

Obviously - this is only a small and annoying thing, but something SMT's and boards really love to do annoying things for no good reason. Create a new name and a new ticker is just setting something like a monument for whoever is running the show at the time. Probably shows they are just human.

Give me only one benefit for Heartland to have again a new ticker!

There are no benefits at all to HGH and it is predictably inconvenient to investors. And sure - the more serious ones will have the relevant data history anyway in their system (or know how to still access it), but it will stop some new investors to consider them for some time.

But hey - this seems to be so much more important to you than to me, so I will try to stop annoying you with this subject.

Apologies for any annoyance caused ...

[winner69]

It’s not Heartlands fault that broking / info sites can’t cope with a ticker code change (even though a new entity has been created)

Vent your fury out on them if one feels so aggrieved

[percy]

It’s not Heartlands fault that broking / info sites can’t cope with a ticker code change (even though a new entity has been created)

Vent your fury out on them if one feels so aggrieved

Exactly.
Heartland would have betrayed shareholders, had they not "restructured" to take advantage of the ongoing huge growth they are experiencing with their offerings in Australia lead by their Reverse Mortgage business.

[iceman]

I light of the discussion and in case some other holders are using Sharesight, this may be of interest:



"Hi XXXXX,
Heartland Bank has completed a corporate restructure.
We’ve created a step by step guide on how to handle Heartland Bank Limited restructure to help you handle this acquisition in your Sharesight Portfolio.
Handle Heartland Bank Limited restructure

If you have any questions, we’re happy to help.
Cheers,
The Sharesight team"

Here is the link https://help.sharesight.com/heartland-bank-limited-restructure/

[Fred_Rubble]

Whilst we are all aware of the recent downward trend of Heartland - my take is this is not specific to Heartland, with many shares significantly down - many got ahead of themselves including Heartland.

There are also macro headwinds such as the Royal commission, with Heartland getting unfairly wrapped up in the negative bank sentiment. This will pass however is dragging on a bit.

But if anything Heartland has made positive moves towards further growth - chasing the Reverse Mortgage market, which is even better with major competitors exiting this market.

I surmise Heartland fore sore impending difficult conditions and has focused on chasing proven and accelerating growth sectors, hence the restructure.

Discl - Holder and investor from the beginning.

Each to their own.

[percy]

Whilst we are all aware of the recent downward trend of Heartland - my take is this is not specific to Heartland, with many shares significantly down - many got ahead of themselves including Heartland.

There are also macro headwinds such as the Royal commission, with Heartland getting unfairly wrapped up in the negative bank sentiment. This will pass however is dragging on a bit.

But if anything Heartland has made positive moves towards further growth - chasing the Reverse Mortgage market, which is even better with major competitors exiting this market.

I surmise Heartland fore sore impending difficult conditions and has focused on chasing proven and accelerating growth sectors, hence the restructure.

Discl - Holder and investor from the beginning.

Each to their own.

Well recent research [latest out today] from NZ's two lending brokers agrees with you.
So do I.
We are "well positioned."

[winner69]

Goodness gracious me ......HGH on a real roll

Who knows might be a double headed head and shoulders pattern ....does such a beast exist

Onwards and upwards ..possibly Aussie investors catching on the potential here

[couta1]

Goodness gracious me ......HGH on a real roll

Who knows might be a double headed head and shoulders pattern ....does such a beast exist

Onwards and upwards ..possibly Aussie investors catching on the potential here End of month squaring up today could be having an effect.

[minimoke]

Goodness gracious me ......HGH on a real roll

Who knows might be a double headed head and shoulders pattern ....does such a beast exist

Onwards and upwards ..possibly Aussie investors catching on the potential hereThats the beauty of a new ticker / HGH chart. Its well off the low and rapidly approaching all time high. Happy days.

[winner69]

Dairy prices up a tad overnight ....HGH share price upna tad this week

Spooky

[Leftfield]

Aust news report on the dangers of reverse mortgages (https://www.abc.net.au/news/2018-12-05/reverse-mortgage-warning-as-daughter-discovers-mothers-loans/10563568). HGH is going to have to tread very carefully.

[percy]

Aust news report on the dangers of reverse mortgages (https://www.abc.net.au/news/2018-12-05/reverse-mortgage-warning-as-daughter-discovers-mothers-loans/10563568). HGH is going to have to tread very carefully.

Heartland have been treading very carefully.So carefully they are recommended by Consumer.
To get a REL you have to have legal and family consent.
Heartland has to explain fully what happens if you need to go into care,want to sell your house and move into a smaller house,etc, etc.
The process takes a month or more, and that is one of the major reasons the major banks are exiting this sector.

[Baa_Baa]

Interesting how few loans referenced in that article (small market for the size of Oz?) and the ASIC comments to avoid! No wonder the big banks shying away, they're experts at risk avoidance.

I've not thought too much about Heartlands foray into the Oz market as I've been solely focused on monitoring the SP for a decent re entry price. But now I'm wondering whether it's becoming one of those 'ethical investment' questions.

Much to ponder.

To Percy, no need to respond, you're thoughts are well publicised.

I'm interested though what others think. Is this a market and company worth investing in for the long term. I'm having doubts.

[minimoke]

Heartland have been treading very carefully.So carefully they are recommended by Consumer.
.Oh no - wheres that thread that was going to be set up on Consumer. I value Consumers view less than I do a Brokers

[fish]

It is easy to see why Banks want to avoid adverse publicity from relatives miffed that they have lost some inheritance.
Before investing in Heartland I looked into their methods carefully.
It appears entirely in keeping with current morals and ethics.
The elderly have a right to take a loan out using house as security to enjoy life.
They will not be evicted by heartland should a financial disaster eventuate

[iceman]

I am surprised that well informed punters like some on here are questioning the ethics of the RELs.
Bear with me while I share my recent experience. Over the last 3-4 weeks, I have been assisting a friend and his sister to deal with some financial pressures on their parents and themselves as a result. The father had a stroke about 10 years ago and is wheelchair bound. Apart from that, they are both in reasonably good health for people in their mid seventies.
They struggle physically with him in a wheelchair and also struggle to make ends meet. In fact, they are supported financially by their 2 children with small weekly top ups just to make ends meet and to buy half decent groceries. Often baked beans on toast is all they can afford.This is difficult for the "children", neither of whom are high income earners. The car is small and unsuitable for an ageing lady to service her husband's needs. She would like new curtains and some rooms painted in their $650,000 fairly moderate, nice and warm home. They do not want to nor feel like they have to go to a retirement home.

I know them well and find it sad that they have to live their twilight years like this, much harder than they deserve. So I discussed RELs with them(the children) and they asked me to get the info. I've been in contact with Heartland and they were extremely helpful and caring. At no stage did they try a hard sell. Quite to the contrary, they were very supportive, informative and very clear that they require family to buy in and legal advice sought.

After a lot of discussion, I am pleased that the family have come to their own conclusion (I've not give any advice for or against, only explained the option) that they will apply for a loan to upgrade the car, get new curtains and possibly paint some rooms in the house. They may further seek a monthly or annual small top up. In my view, if they do this, it will make the twilight years of this lovely old couple MUCH more enjoyable and easier. Unless they both live beyond 105-110 years and continue spending as they are now, the effect on their equity is absolutely minor by any stretch of the imagination.
Their children will also be relieved not having to continue their small top ups, which in reality is just buying their own heritage.

So as fish says above, this situation and the solution provided by RELs, is "entirely in keeping with current morals and ethics" as far as I am concerned. Continuing as they're doing now is not.

[peat]

I agree iceman it is a perfectly valid financial tool for elderly of sound mind, and I find it offensive that the heirs are consulted or have any input into this decision.
Case law clearly shows that any potential inheritance does not exist until death and can not be relied upon. Although of course there is the increasing notion of both equity and adequate provision that courts appear to be supporting within the will itself this is different from assuming an inheritance.
With RELs the issue of sound mind is quite a difficult one. Cognitive impairment, senility, Alzheimers - what ever you describe them as , these are not binary switches where one day your competent and the next day you're not. They develop over sometimes long periods of time and ebb and flow along the way during which they may be able to make reasonable rational decisions sometimes , and at other times appear flummoxed by daily tasks.
Competence can be complicated , exactly at the same time as these sorts of financial decisions arise. This makes the lending riskier but the standardisation of the terms will allow lenders to increasingly mitigate this risk

I think RELs are a good business to be in for the future as many elderly are asset rich but cash poor. Maybe it is prudent to have family members involved as well, but I believe that is the borrowers decision alone.

(My 86 year old Mum has a REL on her property in QLD which I fully supported her taking out)

[minimoke]

But now I'm wondering whether it's becoming one of those 'ethical investment' questions.
What ethical issues concern you?

I see none - indeed teh opposite.

As we go through life we ought to either build up capital in a bank account (or other liquid assets), build up capital in our own property (by aiming to be mortgage free) or a mix of both This way we have a better way of enjoying life post working days.

All a REL is doing is releasing capital that teh home owner has created over time. Why should they not use it in later life? They cant take it with them to teh grave and relatives should have no expectation of getting their mitt on it - in the same way they ought not think they have free access to cash in a bank account.

I think RELs are great idea. Though I dont see why a bank cant just extend a mortgage till death. I presume they simply dont want to be involved in that level of paper work

There is no reason at all for a person with equity in their home to live a financially stressed life. As people age their financial demands arent great relative to potential held equity. In icemans example a nice new set of curtains and newly painted rooms isn't going to take much out of the house equity. In fact these purchase may actually add value to the home. If these folks wanted to push the boat out they could probably get some doors widened and make sure their are enough handrails. Maybe even one of those uppy/downy beds. Ways to make life easier for both. HGH (in my view) are very conservative with teh amount they will lend on a $650,000 property - it was me I'd be extending the limit. Maybe that is for years to come.

Disc. Disappointed holder of HGH and still carrying a paper loss

[Leftfield]

In posting the above article (https://www.abc.net.au/news/2018-12-05/reverse-mortgage-warning-as-daughter-discovers-mothers-loans/10563568) all I was alluding too was that Aust seems to have been rife with shonky REL and this could bite HGH.

I was NOT implying that HGH are guilty of shonky REL practice. Indeed if you read the article, much of the difficulty in this case was that the person making the loan was not required to take independent legal advice. I understand HGH are strong on this point and that is why they get Consumer NZ's ethical ranking. In this I agree with Percy that HGH are setting new, high standards in REL and that is their strength.

However, the bad actions of a few (other lenders) can muddy the waters.....

[percy]

In posting the above article (https://www.abc.net.au/news/2018-12-05/reverse-mortgage-warning-as-daughter-discovers-mothers-loans/10563568) all I was alluding too was that Aust seems to have been rife with shonky REL and this could bite HGH.

I was NOT implying that HGH are guilty of shonky REL practice. Indeed if you read the article, much of the difficulty in this case was that the person making the loan was not required to take independent legal advice. I understand HGH are strong on this point and that is why they get Consumer NZ's ethical ranking. In this I agree with Percy that HGH are setting new, high standards in REL and that is their strength.

However, the bad actions of a few (other lenders) can muddy the waters.....

Yes there have been muddy waters. I noticed a lot of muddy waters in Australia.
Tightening the regulations have helped,but perhaps the Australian Govt offering REL's, via pension top ups rather than lump sums,is giving the REL market greater acceptance.

In NZ acceptance appears to be behind Australia.I would think the NZ market would grow faster if HGH had a major bank as a competitor.
That said,over the past 10 years acceptance of RELs has grown,and looks to be gaining momentum.

[Beagle]

I am surprised that well informed punters like some on here are questioning the ethics of the RELs.
Bear with me while I share my recent experience. Over the last 3-4 weeks, I have been assisting a friend and his sister to deal with some financial pressures on their parents and themselves as a result. The father had a stroke about 10 years ago and is wheelchair bound. Apart from that, they are both in reasonably good health for people in their mid seventies.
They struggle physically with him in a wheelchair and also struggle to make ends meet. In fact, they are supported financially by their 2 children with small weekly top ups just to make ends meet and to buy half decent groceries. Often baked beans on toast is all they can afford.This is difficult for the "children", neither of whom are high income earners. The car is small and unsuitable for an ageing lady to service her husband's needs. She would like new curtains and some rooms painted in their $650,000 fairly moderate, nice and warm home. They do not want to nor feel like they have to go to a retirement home.

I know them well and find it sad that they have to live their twilight years like this, much harder than they deserve. So I discussed RELs with them(the children) and they asked me to get the info. I've been in contact with Heartland and they were extremely helpful and caring. At no stage did they try a hard sell. Quite to the contrary, they were very supportive, informative and very clear that they require family to buy in and legal advice sought.

After a lot of discussion, I am pleased that the family have come to their own conclusion (I've not give any advice for or against, only explained the option) that they will apply for a loan to upgrade the car, get new curtains and possibly paint some rooms in the house. They may further seek a monthly or annual small top up. In my view, if they do this, it will make the twilight years of this lovely old couple MUCH more enjoyable and easier. Unless they both live beyond 105-110 years and continue spending as they are now, the effect on their equity is absolutely minor by any stretch of the imagination.
Their children will also be relieved not having to continue their small top ups, which in reality is just buying their own heritage.

So as fish says above, this situation and the solution provided by RELs, is "entirely in keeping with current morals and ethics" as far as I am concerned. Continuing as they're doing now is not.

Very nicely said mate. Why shouldn't elderly folks live with some dignity, financial freedom and enjoyment in their latter years, its their money not their kids !

[Leftfield]

Iceman, Percy, Beagle I'm with you on this one and should have added/disclosed to my post earlier today that I've added some HGH to my portfolio taking advantage of recent 'lows.'

I think HGH have the opportunity to 'disrupt' the REL industry in an ethical and honourable way. It's not without risk as the article shows, but I've been impressed by what HGH offers in this market. I'm recently retired and although I don't see a need for a REL in my future, it is nice to have a credible operator offering such a service in that sector.

With the structural changes HGH has recently made, it is now 'well positioned' and I hope other investors are too!

(Disc; Holding. DYOR)

[minimoke]

News today:


Heartland Group Holdings Limited (NZX/ASX:HGH) (Heartland Group) announces


that it has established a Dividend Reinvestment Plan giving eligible


shareholders opportunity to reinvest some or all of their dividend payments


into new ordinary shares in Heartland Group.

[winner69]

Don’t forget that Heartland Bank HBL got acquired by a new company Heartland Group HGH and that if you want to participate in the HGH DRP you need to sign up for it.

[Snow Leopard]

I got an email from Link Market Services about the DRiP with a link to click to sign up for it.
That took me to the single holding sign in and once in it then told me that I needed to do a full portfolio sign in to join the DRiP. It is little things like this that drive you to despair!

But I overcome this vast inconvenience and am all signed up again.

Might even buy a few shares on market :mellow:.

[blockhead]

I got an email from Link Market Services about the DRiP with a link to click to sign up for it.
That took me to the single holding sign in and once in it then told me that I needed to do a full portfolio sign in to join the DRiP. It is little things like this that drive you to despair!

But I overcome this vast inconvenience and am all signed up again.

Might even buy a few shares on market :mellow:.


My memory is not completely st....ed yet and I can remember the previous DRP, $2.04 I think, that was a grand idea wasn't it ??

[kiwico]

I got an email from Link Market Services about the DRiP with a link to click to sign up for it.
That took me to the single holding sign in and once in it then told me that I needed to do a full portfolio sign in to join the DRiP. It is little things like this that drive you to despair!

I think you should feel hard done by, I had to just put in my FIN and tick a box. The easiest method of signing up to DRIP I've found.

[waikare]

I think you should feel hard done by, I had to just put in my FIN and tick a box. The easiest method of signing up to DRIP I've found.

Agree Easy as

[Bjauck]

Interesting how few loans referenced in that article (small market for the size of Oz?) and the ASIC comments to avoid! No wonder the big banks shying away, they're experts at risk avoidance.

I've not thought too much about Heartlands foray into the Oz market as I've been solely focused on monitoring the SP for a decent re entry price. But now I'm wondering whether it's becoming one of those 'ethical investment' questions.... The old “ethical investment” question. It often depends on your “personal ethical priorities”. For some, ensuring companies produce environmentally friendly products and pay their workers a living wage is an ethical question. There are the obvious issues to ponder according to one’s personal ethics. However the big issue should be that the company has a licence to operate and complies with all laws and regulations as promulgated by our legitimate authorities. Anything else is according to your personal ethics.

For me, if the borrower receives independent advice and and is of sound mind is important. They should then have the choice to take out a reverse mortgage, even if some others may think the interest rate charged constitutes unethical (according to them) usury.

A great proportion of New Zealanders have most of their equity wrapped up in their home. This concentration of NZ household wealth in residential land has happened as a result of the NZ investment and tax environment. The homeowner should be able to access this locked-in equity if they want before they die. The company providing the service should be able to charge interest for enabling this to happen.

[winner69]

The Bank part of Heartland Group probably needs more capital (Equity that is) if this goes ahead

http://www.sharechat.co.nz/article/e1362067/big-four-banks-face-stiffer-capital-requirements-from-rbnz.html?utm_medium=email&utm_campaign=Big%20four%20banks%20face%20stiffer%2 0capital%20requirements%20from%20RBNZ&utm_content=Big%20four%20banks%20face%20stiffer%20 capital%20requirements%20from%20RBNZ+CID_7a2691c69 9276c1a83fe7a253fa9c6ba&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlee1362067big-four-banks-face-stiffer-capital-requirements-from-rbnzhtml

[Ggcc]

The Bank part of Heartland Group probably needs more capital (Equity that is) if this goes ahead

http://www.sharechat.co.nz/article/e1362067/big-four-banks-face-stiffer-capital-requirements-from-rbnz.html?utm_medium=email&utm_campaign=Big%20four%20banks%20face%20stiffer%2 0capital%20requirements%20from%20RBNZ&utm_content=Big%20four%20banks%20face%20stiffer%20 capital%20requirements%20from%20RBNZ+CID_7a2691c69 9276c1a83fe7a253fa9c6ba&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlee1362067big-four-banks-face-stiffer-capital-requirements-from-rbnzhtml
I knew they would need more capital to keep paying those lovey divies. I am quite happy if they kept the divie as is and kept extra money for expansion. Of course this bank will end up swallowed up by someone else eventually

[Snow Leopard]

The Bank part of Heartland Group probably needs more capital (Equity that is) if this goes ahead

http://www.sharechat.co.nz/article/e1362067/big-four-banks-face-stiffer-capital-requirements-from-rbnz.html?utm_medium=email&utm_campaign=Big%20four%20banks%20face%20stiffer%2 0capital%20requirements%20from%20RBNZ&utm_content=Big%20four%20banks%20face%20stiffer%20 capital%20requirements%20from%20RBNZ+CID_7a2691c69 9276c1a83fe7a253fa9c6ba&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlee1362067big-four-banks-face-stiffer-capital-requirements-from-rbnzhtml

Article suggests Heartland Bank would need 15% capital adequacy ratio, and I assume it is correct.

Historically Heartland Bank, both when it was bank owned by HNZ and when it owned everything ran at 13.5% plus.
Come Feb we will, hopefully, find out where it sits now that is owned by HGH, but I can imagine that it is not far off meeting a 15% requirement.

But we will have to wait and see what comes about.

Time to make Tuna Sandwiches for tea :).

[winner69]

I’ll get Snoopy to assess how much more capital Heartland Bank might need to reach new ‘rules’

[horus1]

That would explain the shareprice weakness. Makes the new set up a good move

[winner69]

That would explain the shareprice weakness. Makes the new set up a good move

Might be able to reallocate / transfer some of equity allocated to the non-banking group to the banking group to shore up the banking group (or some other financial engineering) — sneaky eh

[percy]

Might be able to reallocate / transfer some of equity allocated to the non-banking group to the banking group to shore up the banking group (or some other financial engineering) — sneaky eh

More like easy peasy.
Could even alter the ratio on a daily basis,making the most of their capital.
Clever CEO our Jeff.
"What capital ratio do you want today Adrian"?

[Snow Leopard]

I’ll get Snoopy to assess how much more capital Heartland Bank might need to reach new ‘rules’

Something to look forward to :mellow:

[winner69]

It’s going to take years before anything needs to be done ..that 15% mentioned is by 2025 or something

No worries

[percy]

It’s going to take years before anything needs to be done ..that 15% mentioned is by 2025 or something

No worries

Never has been.

[winner69]

Never has been.

From a regulatory POV I agree ....but from a prudent / risk POV some would say there are some worries ....the world is too highly leveraged and has become complacent ...like no worries nothing can go wrong

[winner69]

Never has been.

From a regulatory POV I agree ....but from a prudent / risk POV some would say there are some worries ....the world is too highly leveraged and has become complacent ...like no worries nothing can / will go wrong

[winner69]

What the RBNZ is talking about

https://www.rbnz.govt.nz/-/media/ReserveBank/Files/regulation-and-supervision/banks/consultations/20181214%20Capital%20Review%20Consultation%20How%2 0much%20capital%20is%20enough.pdf?la=en

[Scrunch]

This looks to be the roading equivalent of saying - lets avoid crashes and decrease the speed limit. If we set the open road speed limit at 60 kph, there will be a lot less fatal crashes so let forget 90, 80 and go straight down to 60.

This would be great at achieving this single objective (assuming adherence to the rules). It would create incredible operational inefficiencies relative to previous settings.

So if you need up to 60% more capital to do the same lending, if no additional capital is contributed, lending needs to reduce by 37.5%.
All of this additional capital that is soaked up in the higher "safety" threshold hasn't been made available to residental and commercial customers
If your lending has to reduce by 37.5%, there would need to be quite an expansion of margins so that this reduced activity level didn't cause profitability to drop
The more capital that is needed, the harder it is to finance growth.
Also unless RBNZ were to relax their buffer requirements should banks post losses, banks would need to operate above this new threshold. This potentially means that we could have the strange combination of a severe credit crunch (which is just what RBNZ are trying to avoid) when banks are actually pretty sound on international benchmarks.

There looks to be some pretty big down-side risks to NZ inc from this decision (if it progresses in its current form).

[hamish]

Of cource its just coincidence that RBNZ want to increase the financial Capital requirements?? ... After they arguably had a decent (negative?) role to play in the capital reserves needed for CBL and the events that followed..

NZRB hands got burnt.. So best make a much larger buffer do rerisk themselves vs really derisking the banking big 4.. Who by accounts have decent ratios v international benchmarks....

.. And sigh, I bought decent amount of WBC last week.. Thinking its at its lows and on the up after their Aus AGM and mea culpa seemed well received.

[Snoopy]

I’ll get Snoopy to assess how much more capital Heartland Bank might need to reach new ‘rules’




It’s going to take years before anything needs to be done ..that 15% mentioned is by 2025 or something

No worries



Never has been.


Well the market is looking a little worried, with the share price down to $1.46. But I guess it is just following the general market trend. Nothing to do with having a 'Shortage of Capital'! Hey that last phrase sounds familiar. Where abouts on this thread have I heard it before?

SNOOPY

[percy]

You heard from the same poster who said Heartland would not get a banking licence.
You may not have a long memory,but I have.....lol.

[Beagle]

https://www.msn.com/en-nz/money/markets/kiwis-push-for-dollar12b-capital-boost-from-big-four-banks/ar-BBR3fq8?ocid=spartandhp

I would think HGH would be okay with its teir 1 capital ratio already but after the Aussies milking us Kiwi's for years and having low capital ratio's the RBNZ obviously thinks its time for them to sure-up their capital ratio's here and I have no sympathy for them.

[horus1]

Surely this is positive for HGH

[couta1]

This things broken and I bought more yesterday at $1.45, I'm moving back to my roots next year by getting away from diversification in any meaningful way, every time I've gone beyond holding 3 or 4 stocks I've been skunked.

[Timesurfer]

This things broken and I bought more yesterday at $1.45, I'm moving back to my roots next year by getting away from diversification in any meaningful way, every time I've gone beyond holding 3 or 4 stocks I've been skunked.

I bought these for the diversification with dividend approach - now hoping they unbreak sometime in the future.
First time my portfolio has come up with a net red. I hope the falling knives I am playing with don't bleed me out!

[trader_jackson]

I would have actually thought HBL was best positioned of the banks, market seems to think differently!
Bigly differently, with it going down 10c in not much over 10 trading hours.

My (re)entry price of $1.50 looking very expensive now.

[oldtech]

I first bought into this (one of my very first purchases!!) just over three years ago at $1.33. Sold out (belatedly) in two parcels at $1.68 and $1.49, wonder if I'll be re-entering at the same price I first bought at?! :p

[minimoke]

Not far to go before my stop loss gets triggered. Maybe signing up for the DRP was a waste of time - I may not be a holder fro that much longer

[Leftfield]

I first bought into this (one of my very first purchases!!) just over three years ago at $1.33. Sold out (belatedly) in two parcels at $1.68 and $1.49, wonder if I'll be re-entering at the same price I first bought at?! :p

I exited this stock yesterday given the current market uncertainty, RBNZ uncertainty, and negative TA I will wait on the sidelines for any upend before re-investing. GLH.

[trader_jackson]

$1.36, down over 6% today with an hour left to trade... and we won't talk about yesterdays drop either... winner, you reckon the race between ARV and HGH back on?

[winner69]

$1.36, down over 6% today, on top of yesterdays 5% drop... winner, you reckon the race between ARV and HGH back on?

ARV on verge of going into free fall so I'd be pretty safe in saying HGH will be higher than ARV no matter what happens to both

[ScrappyO]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12179078

Heartland led the market lower, falling 6.9 per cent to $1.35, its lowest close since August 2016. The local lender has dropped 11 per cent since the Reserve Bank unveiled plans that would require a significant increase in the capital held by banks. Macquarie analysts estimate Heartland would need to boost its capital holdings by about $1 billion.

Anyone heard anything from heartland.

[winner69]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12179078

Heartland led the market lower, falling 6.9 per cent to $1.35, its lowest close since August 2016. The local lender has dropped 11 per cent since the Reserve Bank unveiled plans that would require a significant increase in the capital held by banks. Macquarie analysts estimate Heartland would need to boost its capital holdings by about $1 billion.

Anyone heard anything from heartland.

Heartland said this yesterday
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/328529/292595.pdf

To put that possible $1 billion extra capital needed shareholder equity at June 2018 was only $664m. That would be a huge injection eh ...but when one is highly leveraged to start with that would good.

[Ggcc]

Heartland said this yesterday
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/328529/292595.pdf

To put that possible $1 billion extra capital needed shareholder equity at June 2018 was only $664m. That would be a huge injection eh ...but when one is highly leveraged to start with that would good.
They may need to hold off on dividends for the proposed 5 years. That is crazy money to try to raise

[percy]

Heartland said this yesterday
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/328529/292595.pdf

To put that possible $1 billion extra capital needed shareholder equity at June 2018 was only $664m. That would be a huge injection eh ...but when one is highly leveraged to start with that would good.

Well Heartland Bank will require a 15% equity ratio.
We know HBL had a 13.4% equity ratio.
I believe to take that 13.4% ratio to 15% would require $69mil extra equity.[over 5 or more years].
However HBL included Australian REL and other Australian business.
Take that out of HGH,then we have to find out how much capital that 15% requires.
I really do not know,but I can see Heartland Bank having 15% equity ratio,but I will have to see what equity ratio HGH has.
To suggest HGH needs to raise a lot of capital to support Heartland Bank is with out foundation.
The rapid growth in Australia will mean at some stage HGH will want more capital to support further ongoing growth.

[Ggcc]

Well Heartland Bank will require a 15% equity ratio.
We know HBL had a 13.4% equity ratio.
I belive to take that 13.4% ratio to 15% would require $69mil extra equity.[over 5 or more years].
However HBL included Australian REL and other Australian business.
Take that out of HGH,then we have to find out how much capital that 15% requires.
I really do not know,but I can see Heartland Bank having 15% equity ratio,but I will have to see what equity ratio HGH has.
To suggest HGH needs to raise a lot of capital to support Heartland Bank is with out foundation.
The rapid growth in Australia will mean at some stage HGH will want more capital to support further ongoing growth.
Why would Macquarie say Heartland would need an additional $1 billion for? Additional as in above the $600 million + they have?

[Snow Leopard]

Heartland said this yesterday
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/328529/292595.pdf

To put that possible $1 billion extra capital needed shareholder equity at June 2018 was only $664m. That would be a huge injection eh ...but when one is highly leveraged to start with that would good.

If HGH need to raise $1B then they have an awful lot of stuff hidden away off the balance sheet then they have never, ever mentioned before.

[ $583M was good enough to do 13.71% for HBL ]

[winner69]

RBNZ report reads as if they also going to tighten up on how equity ratios are calculated .....banks are a bit dodgy how they do it now.

[Baa_Baa]

Well Heartland Bank will require a 15% equity ratio.
We know HBL had a 13.4% equity ratio.
I belive to take that 13.4% ratio to 15% would require $69mil extra equity.[over 5 or more years].
However HBL included Australian REL and other Australian business.
Take that out of HGH,then we have to find out how much capital that 15% requires.
I really do not know,but I can see Heartland Bank having 15% equity ratio,but I will have to see what equity ratio HGH has.
To suggest HGH needs to raise a lot of capital to support Heartland Bank is with out foundation.
The rapid growth in Australia will mean at some stage HGH will want more capital to support further ongoing growth.

Good points, the alarmists leaping to conclusions about getting to 15% is just wrong, but the market recognised that "The rapid growth in Australia will mean at some stage HGH will want more capital to support further ongoing growth." and on the back of a US market rout to recent lows, that NZX diligently follows, it's not surprising HGH SP has been punished along with the other banks who incidentally have not disclosed that they will require further capital raising, like Heartland probably will.

Listen to the market, it has a schizophrenia about it but it does foretell discomfort and concern, in this case potentially further dilution right when the company is looking to expand into new international markets and the RBNZ raise the bar on local capital adequacy. One can't ignore the market, it's been saying for a long time that Heartlands' SP got way ahead of itself, all we're trying to figure out is how far ahead that actually is.

[Beagle]

What a shocker. Another day with a final wave of capitulation tomorrow ?
Hey Winner...that head and shoulders is now complete except we can't see it because there's this new listing ticker.

[Fred_Rubble]

I would think like any good bank the extra costs will be passed onto the consumer in the form of higher interest rates. Will be interesting how these tightening credit conditions will flow into the NZ housing market.

[fish]

This things broken and I bought more yesterday at $1.45, I'm moving back to my roots next year by getting away from diversification in any meaningful way, every time I've gone beyond holding 3 or 4 stocks I've been skunked.

I think the mistake is not diversification but not understanding risk-or just being greedy.
Perhaps we get carried away and biased on threads such as this.
You mentioned sometime ago you had invested in mercury.
In my case the gains from this have far outweighed the loss here.
Most of my investments are low risk and diversified.
Strange how we dont seem to talk so much about the less risky shares .

[iceman]

I would think like any good bank the extra costs will be passed onto the consumer in the form of higher interest rates. Will be interesting how these tightening credit conditions will flow into the NZ housing market.

ANZ NZ has come out and said they will need additional $ 6-8 BILLION to meet the new capital requirements. BNZ, Westpac and ASB have all said they need large numbers. All the aforementioned, as well as Kiwibank, have said there is no question mortgage and other lending rates need to go up.
Lets see if the Reserve Bank actually goes ahead with this. Can't imagine the Government being excited about it.

[Beagle]

https://tmmonline.nz/article/976514118/rbnz-proposals-will-slow-credit-growth-kiwibank

I like the analogy of the plumber used in this story. I expect the net effect on HGH in terms of earnings per share going forward to be minimal if any.

[minimoke]

https://tmmonline.nz/article/976514118/rbnz-proposals-will-slow-credit-growth-kiwibank

I like the analogy of the plumber used in this story. I expect the net effect on HGH in terms of earnings per share going forward to be minimal if any.Costs going up, to me, is likely outcome. Has (intended) consequence of making credit more expensive and will help cap demand for credit

[BlackPeter]

What a shocker. Another day with a final wave of capitulation tomorrow ?
Hey Winner...that head and shoulders is now complete except we can't see it because there's this new listing ticker.

Here we go - courtesy of bigcharts:

10204

[winner69]

Here we go - courtesy of bigcharts:

10204

Jeez that’s one really sad chart

Multiyear lows and nearly 40% off it’s not that long ago highs

What a dog

Doubt Heartland will be showing a TSR Chart in their upcoming presentations .....Jeff was always so proud of such a chart and shareholders salivated over it.

Maybe reasonably priced by the market now ....just

I take my hat off to those punters who sold out over 2 bucks

[couta1]

Here we go - courtesy of bigcharts:

10204 The Mountain looks complete.

[Beagle]

Jeez that’s one really sad chart

Multiyear lows and nearly 40% off it’s not that long ago highs

What a dog

Doubt Heartland will be showing a TSR Chart in their upcoming presentations .....Jeff was always so proud of such a chart and shareholders salivated over it.

Maybe reasonably priced by the market now ....just

I take my hat off to those punters who sold out over 2 bucks

Thanks and many thanks to you BP for the chart. I reckon we're very close to a bottom on this. $1.32 would see this as a perfect 10/10
Forward PE of 10 based on forecast earnings of 13.2 cps and 10% gross dividend yield based on 9.5 cps / 0.72 = 13.194 cps gross.
Those are to the best of my recollection the best metrics this company has traded on in many many years.
http://www.sharechat.co.nz/article/9d85dcff/dairy-product-prices-rise-as-whole-milk-powder-edges-higher.html?utm_medium=email&utm_campaign=Dairy%20product%20prices%20rise%20as% 20whole%20milk%20powder%20edges%20higher&utm_content=Dairy%20product%20prices%20rise%20as%2 0whole%20milk%20powder%20edges%20higher+CID_a7c0a3 cdef206d6d4bf8e90f655df61c&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle9d85dcffdairy-product-prices-rise-as-whole-milk-powder-edges-higherhtml
We all know this strong correlation so that suggests we have already hit a bottom and its onward and upward from here.

[minimoke]

From todays announcment

"Heartland's Tier 1 capital ratio is currently approximately 13.2%. If the proposal was to be implemented in its current form, Heartland would be required to lift its Tier 1 capital ratio to 15% over a 5 year transitional period. This equates to an increase in Tier 1 capital of less than 0.4% (or approximately $15m) per year, based on Heartland's current financial position.

Following the recent corporate reorganisation, Heartland's new corporate structure gives it some flexibility to mitigate the impact of any future changes:

o Heartland's Australian reverse mortgage business (with approximately A$640m of assets) is not part of Heartland's banking group. Hence any new capital requirements will not apply directly to those assets.

o Heartland's corporate structure provides for various capital raising options. For example, Heartland Group Holdings Limited could potentially raise debt, and use the proceeds to subscribe for new Tier 1 capital in Heartland Bank Limited. "

[Beagle]

(Assuming it was reported correctly), whoever at Maquaries said HGH would need to raise $1b in extra capital should be fired as in my opinion they have seriously undermined the credibility of their organisation.

[BlackPeter]

(Assuming it was reported correctly), whoever at Maquaries said HGH would need to raise $1b in extra capital should be fired as in my opinion they have seriously undermined the credibility of their organisation.

True, but thanks to them the market was really depressed. Bought some this morning at 136 ... and think I might owe them a beer ;); time will tell ...

[trader_jackson]

Dam, all the panicking is over and I missed out on cheap shares... ah well
OCA still getting cheaper so might have to look there

[minimoke]

(Assuming it was reported correctly), whoever at Maquaries said HGH would need to raise $1b in extra capital should be fired as in my opinion they have seriously undermined the credibility of their organisation.This is surely worth a "please explain".

[Beagle]

True, but thanks to them the market was really depressed. Bought some this morning at 136 ... and think I might owe them a beer ;); time will tell ...

Congrats but I think the question has to be asked. Did they deliberately put out disingenuous information and then short the shares to make a quick 10% over the last two days

[trader_jackson]

This is surely worth a "please explain".

SSH from Maquaries coming??

[beetills]

Interesting that the HGH announcement was classified as '' not price sensitive''
I would suggest that it is exactly the opposite.

[winner69]

Love this bit from Heartland’s announcement — “Heartland Group Holdings Limited could potentially raise debt, and use the proceeds to subscribe for new Tier 1 capital in Heartland Bank Limited. "

Yep, real financial engineering to circumvent the intent of the RB is indeed possible ...questionable?

[Beagle]

Dam, all the panicking is over and I missed out on cheap shares... ah well
OCA still getting cheaper so might have to look there
You know you want to switch out of your low 17% growth underlying profit company into a greyhound that's growing at triple the rate. Be quick or be disappointed :)

Love the bit in Heartland's announcement where they said they can meet the new capital requirements simply through the dividend reinvestment scheme over the next five years. Talk about an easy bar to jump. Will be brutally tough for some banks though but that's their problem not HGH's !