HGH - Heartland Group Holdings

[Muse]

liquidity nearly equal to on call deposits- that's a very good bank.
But how robust is their loan book I wonder?


CaM - I normally wouldn't share things I've prepared for my own benefit but given interest in the topic I've attached a few workings from my files.

Below is a snapshot that includes Heartland's actual incurred net credit losses as a % of average interest earning assets. Within a banks P&L there is total impairments, which consists mainly of the sum of the ACTUAL receivables written off during a period (net of recoveries), and then the movement in provision which can be a bit chunky as things are provided for and released. Bad debt expense as a % of ave assets dropped 29bps, and in relative terms improved 57% (-.22%/-.51% less 1) on FY20 results. Actual credit loss expense in 1H FY23 improved on FY21 and FY22 (when conditions were extremely benign), and in a macro environment where interest rates and inflation are high and the economy contracted in the fourth quarter. I think this is a remarkable achievement all things considered.


14523


In my view much of this is due to the improved credit mix of receivables. For instance, HGH wrote P2p personal loans via Harmoney (who have now discontinued facilitating P2P loans) with those receivables peaking at 5.3% of total gross credit exposure in 2020. When P2P loans were peaking, while they only represented ~5% of total receivables they contributed 30-40% of total heartland impairments during those periods. Personal lending is now down to 0.9% of total exposure. Reverse mortgages and mortgages which are relatively low risk have also increased in % of the book, from 27% at the start of 2018 and are now 35.3% now.

I saw a great bit of analysis years ago from a broker looking into the mix of HGH receivables but they've never updated it so I went back and recreated it, updated it and made it my own. It basically looks at each type of credit exposure, assigns a relative risk grade (IE how they compare to each other, but not in an absolute sense), and then comes up with a weighted average index. It shows it has improved and continues to improve. Some of the weightings are subjective but none the less its a useful framework. IE personal lending clearly if on a 1-5 scale is a 5, RM's a 1, mortgages a 2...rural more difficult to consider but conservatively assigned it a high/4 risk weighting. P2P lending I've shown as a 5 (as wanted to keep it 1-5) but in reality its probably more like a 7. It's all highly subjective but I thought it was a (semi) interesting framework, though I think the real story is simply just the % mix of personal lending vs RM and mortgage lending.

14524


NZ reverse mortgages have a weighted average LVR of 19.7% (0 loans over 75% LVR) and an average borrower age of 78. Australia's are much the same: weighted ave LVR of 20% (only 3 loans over 75% LVR) with an average borrower age of 77.

Looking at the relatively small mortgage book (4.3% of total exposure), as best I can tell by looking at the HBL disclosure statement, even after last years decline in property prices, 99% of the mortgage book was below 80%. Only 1% was above 80%, and 0% above 90%. They don't provide information below the 80% so dont know what the weighted average LVR is.

So I personally believe HGH have made strides in improving the credit quality of their book, evidenced in the proportion mix of high risk and low risk lending, and credit losses / bad debt expense as a % of assets.

On 30 June 2022 HGH provided $8m towards a specific macro conditions provision. Last year HGH had total impairment expenses of 13.8 - consensus forecast is for that to rise to 18.7 in the current year. I'm not brave enough to wager a guess on what it'll ultimately be.

[Snoopy]

CaM - I normally wouldn't share things I've prepared for my own benefit but given interest in the topic I've attached a few workings from my files.

<snip>

Hope that is useful.


FM that is a great piece of work, and hopefully should help remove some jitters from 'nervous nellie' Heartland shareholders. I guess the only caveat is that all of this information is historical (obviously) and that default risk in today's market is not necessarily the same as default risk in tomorrow's market.

I note with interest how you have classified loan category risk on respective category ratings of 1 to 5. I wonder if it is possible to adjust this model to reflect what I am talking about? I am bringing in the idea here of 'relative risk change'. As an economy enters recession loan risk will go up. But some categories of loan risk will go up more than others. In order to answer that question myself, I would need to know a bit more how your relative risk rating system works.

For example, I notice you have categorised reverse mortgages as the lowest risk category of all (1), while personal retail mortgages come in under the second least risky category (2). One way of interpreting that would be to say that based on those absolute numbers (1&2), a retail personal mortgage is twice as risky as a reverse mortgage. Yet both of these are loans against the same asset class! That doesn't seem right to me. I may be way off beam about this and be reading your table in the wrong way. But I am wondering if you could clarify? TIA

SNOOPY

[Muse]

@clearasmud - w/ respect to liquidity - banks in New Zealand are all governed by the RBNZ and so far as I'm aware are all subject to the same regulatory minimum liquidity ratios.
In that respect its interesting to note that of the 3 key liquidity ratios subject to regulatory requirements that Heartland is bang-in-line with the big 4.

Heartland's December quarterly average core funding ratio was 90.4% vs big4 of 90.2% (and was 91.2% as at 31 December 2022), 1 month mismatch ratio of 7.6% vs big4 of 7.8% (and heartland's rose to 10.2% on 31 December 22), and 1 week mismatch ratio of 8.0% vs 8.1% for the big banks (and was 9.8% at 31Dec22).

14525

Heartland's core funding ratio was above Westpac and ASB, its 1 month mismatch ratio was above ASB and the same as westpac, and its 1 week mismatch was above both ASB and BNZ.

Banks receive credit ratings from various agencies. The only provider to cover all the big4 and heartland (on a like for like basis) is Fitch. Big4 rated A+, heartland BBB (same as co-op bank and SBS bank).

All useful bits sourced directly from the RBNZ (w/ the exception of the 31dec22 hbl liquidity ratios - those are from heartland's latest preso, whereas the HBL quarterly average's are from RBNZ)

DISC: shareholder in HGH.

[clearasmud]

Thanks so much F.M.
Great analysis.
Is core funding the same as equity. What is mismatch?

[Muse]

I guess the only caveat is that all of this information is historical (obviously) and that default risk in today's market is not necessarily the same as default risk in tomorrow's market.

I note with interest how you have classified loan category risk on respective category ratings of 1 to 5. I wonder if it is possible to adjust this model to reflect what I am talking about? I am bringing in the idea here of 'relative risk change'. As an economy enters recession loan risk will go up. But some categories of loan risk will go up more than others. In order to answer that question myself, I would need to know a bit more how your relative risk rating system works.

For example, I notice you have categorised reverse mortgages as the lowest risk category of all (1), while personal retail mortgages come in under the second least risky category (2). One way of interpreting that would be to say that based on those absolute numbers (1&2), a retail personal mortgage is twice as risky as a reverse mortgage. Yet both of these are loans against the same asset class! That doesn't seem right to me. I may be way off beam about this and be reading your table in the wrong way. But I am wondering if you could clarify? TIA

SNOOPY

yep agree w/ that and take your point on reverse mortgages and mortgages. I guess I'm a little bit influenced by the fact I can see the LVRs and age profile of RM receivables, on mortgages I can't. It's totally subjective and relative risk can change through time as you rightly say. I'm probably less interested in that weighted ave number popping out at the bottom than just the changing % of personal loans relative to the % of RMs + mortgages, which is basically the underlying story in my view.

[percy]

yep agree w/ that and take your point on reverse mortgages and mortgages. I guess I'm a little bit influenced by the fact I can see the LVRs and age profile of RM receivables, on mortgages I can't. It's totally subjective and relative risk can change through time as you rightly say. I'm probably less interested in that weighted ave number popping out at the bottom than just the changing % of personal loans relative to the % of RMs + mortgages, which is basically the underlying story in my view.

Thank you Fiordland Moose for sharing your excellent research.

[Rawz]

Yes thanks FM for sharing, wish i could give more reps. The HGH book is quite well spread between RM, Motor, Rural and Business lending. I suppose next step is business and motor lending in Aus, after stockco is bedded in.

[Snoopy]

Yep agree w/ that and take your point on reverse mortgages and mortgages. I guess I'm a little bit influenced by the fact I can see the LVRs and age profile of RM receivables, on mortgages I can't. It's totally subjective and relative risk can change through time as you rightly say. I'm probably less interested in that weighted ave number popping out at the bottom than just the changing % of personal loans relative to the % of RMs + mortgages, which is basically the underlying story in my view.

I think you are right to concentrate on the underlying story rather than being too caught up on the minutiae of detail. But going back to the 'mortgage', 'reverse mortgage' relative rating, suppose you thought of that in a slightly different way.

If, for instance, you gave all loans a base rating of '5' -and then-, keeping the 1-5 rating scale you have now, added these relative risks to that 'base risk rating'. You would then end up with an overall risk ratings of:

For reverse mortgages: 5+1=6
For regular mortgages: 5+2=7

That would give a relative risk rating of: (7/6-1) = 16.6% verses (2/1 -1)=100% under the other alternative method. Just saying that the same risk ratings you use now could give very different relative risk results, depending on how you choose to use them.

SNOOPY

[Muse]

Thanks so much F.M.
Great analysis.
Is core funding the same as equity. What is mismatch?

No worries - mainly just taking things directly from the RBNZ and lining them up side by side in a table really.

Here is a link to the liquidity definitions from the RBNZ - no point me making a hash out of trying to explain them (I have an interest in the sector having dabbled with hgh shares, but am no expert and have never worked in commercial banking so my understanding of many things likely incomplete)

https://bankdashboard.rbnz.govt.nz/liquidity

RBNZ bank dashboard a free great resource w/ a lot of timely data in it. It's worth people having a look around, doing their own work and coming to their own view w/ respect to their own banking considerations.

[ralph]

The weakest link in our banking sector HGH getting trashed again today ,I suppose if any this will be the One

[Snoopy]

The weakest link in our banking sector HGH getting trashed again today ,I suppose if any this will be the One


'Getting trashed' = up by 1c (to 153)? We could do with more trash talk like that!

SNOOPY

[justakiwi]

Have you even read anything that has been posted here over the last few days?

I suggest you do.


The weakest link in our banking sector HGH getting trashed again today ,I suppose if any this will be the One

[thegreatestben]

JAK - this link might be helpful - https://knowyourmeme.com/memes/bait-this-is-bait

Sometimes your reactions to post like the above are just as annoying as the trolls themselves, I don't want to put you on ignore because I'd miss anything of merit you do have to add to the conversation.

[ralph]

Have you even read anything that has been posted here over the last few days?

I suggest you do.

Yuup does not mean I or anyone else has to agree with you & what's posted .
I suggest you accept people have alternative Opinions .
And what's not true about the minnow HGH not being the weakest link now down 5% Snoopy

[Muse]

Looking at a live feed Ralph - hgh up 1c/0.7% - hasn't been down 5% at any one point today on the NZX. vwap at writing of 1.521c, hasn't had a trade lower than $1.51

Clear you are looking at hgh on the asx (down 5c or 3.3% on a whopping 3269 shares traded) and pointing to that as "the" price - highly disingenuous post.

LTM average volume on the ASX: 1,466 shares per day (yahoo finance)
LTM average volume on the NZX: 322,042 (yahoo finance)
NZX average daily volume only 21,867% more than the ASX
wonder which is more instructive to market price...

[justakiwi]

Just add me to your ignore list if that's how you feel. I seriously doubt anything I post will be of any significant value to you.



JAK - this link might be helpful - https://knowyourmeme.com/memes/bait-this-is-bait

Sometimes your reactions to post like the above are just as annoying as the trolls themselves, I don't want to put you on ignore because I'd miss anything of merit you do have to add to the conversation.

[850man]

Just add me to your ignore list if that's how you feel. I seriously doubt anything I post will be of any significant value to you.

JAK, I think what people are suggesting here is that you post a counter argument with facts to back that up. Far more beneficial to all of us readers.

[777]

The weakest link in our banking sector HGH getting trashed again today ,I suppose if any this will be the One

Getting trashed again. Up to 157 now. 3.3%.

[justakiwi]

With all due respect I didn't feel the need to do that as a great deal of information and counter argument had already been provided by people far smarter than me! Which is why I posted the very simple comment that I did.

It seems to me that trolls get better treatment here than those who call them out do. I just do not get that.

Let's just get back to HGH now please.


JAK, I think what people are suggesting here is that you post a counter argument with facts to back that up. Far more beneficial to all of us readers.

[Snoopy]

And what's not true about the minnow HGH not being the weakest link now down 5% Snoopy


Yes it did fall again to 151 after I wrote my post, but is now up 3.3% on the day at 1.57. I think you are reading far too much into what is normal market volatility.

SNOOPY

[ralph]

Yes it did fall again to 151 after I wrote my post, but is now up 3.3% on the day at 1.57. I think you are reading far too much into what is normal market volatility.

SNOOPY
I to true Snoopy & a lot of other company's reaching new lows on downward trends as you say the volatility is there for all to see .
I am here to say disingenuously reiterating that hgh is a minnow compared to the rest & has a the worst credit rating as well = is the weakest link .
I Wish all holders well & don't wish to comment any further as it may offend anyone overcommitted

[percy]

From an article by Brian Easton
Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian.

"Currently your best choice is to be cautious about your return – the higher return, the greater the risk – and to choose financial institutions which are well supervised and regulated by the Reserve Bank of New Zealand."

PS.Wife and I hold shares in GEN and HGH,both of which are as above.

[winner69]

From an article by Brian Easton
Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian.

"Currently your best choice is to be cautious about your return – the higher return, the greater the risk – and to choose financial institutions which are well supervised and regulated by the Reserve Bank of New Zealand."

PS.Wife and I hold shares in GEN and HGH,both of which are as above.

Good old Brian eh

But both you and Brian are echos of Richard Long “ Hanover, a New Zealand business with the size and strength to withstand any conditions."

[percy]

Good old Brian eh

But both you and Brian are echos of Richard Long “ Hanover, a New Zealand business with the size and strength to withstand any conditions."

Big difference between Brian and Richard,one knows finance the other proved he did not.
If you do not know the difference ,pity you .

[SCOTTY]

Big difference between Brian and Richard,one knows finance the other proved he did not.
If you do not know the difference ,pity you .

Well said Percy - facts beat fiction every time :)

[BlackPeter]

'Getting trashed' = up by 1c (to 153)? We could do with more trash talk like that!

SNOOPY

ralph clearly was talking about the quality of his posts ...

[nztx]

Did someone say another Cap Raise on the way soon ? :)

[Recaster]

From an article by Brian Easton
Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian.

"Currently your best choice is to be cautious about your return – the higher return, the greater the risk – and to choose financial institutions which are well supervised and regulated by the Reserve Bank of New Zealand."

PS.Wife and I hold shares in GEN and HGH,both of which are as above.

A modification which might be useful to the popular aphorism 'the higher the return, the greater the risk' is 'the higher the return, the greater the perceived risk'.

Actual risk and perceived risk are rarely the same.

[percy]

A modification which might be useful to the popular aphorism 'the higher the return, the greater the risk' is 'the higher the return, the greater the perceived risk'.

Actual risk and perceived risk are rarely the same.

Agreed....
Three years ago investing in Silver Fern Farms on Unlisted was perceived as high risk.
Iceman did his research and below is his post on Unlisted thread today;

Sort of staggering that shares picked up 3 years ago at 70-78 cents have paid out 63.8 c gross in dividends and doubled in value over that period as well.The crazy thing is that this company is still very cheap trading on a PE of 1.55 with a gross dividend yield of 21.5%. A company that has no debt, is cashed up and very profitable.
Not much else to say. Mindblowing.

While this year will be more difficult than last 2 years at least from a market perspective, an ease in freighting troubles & prices will help offset that. The future is looking very bright for this company.

[winner69]

Did someone say another Cap Raise on the way soon ? :)


Chris Lee thinks cap raise coming soon

Put away the pennies

https://www.chrislee.co.nz/taking-stock

[RTM]

Chris Lee thinks cap raise coming soon

Put away the pennies

https://www.chrislee.co.nz/taking-stock

And that our dollar will drop to US$0.55 ! Again.

[alokdhir]

How long back did I mention this ...about further Cap raise possibility thus reason for me to stay away ...but not many agreed at that time ....but now when SP reaches 1.35 or so then my words of August last will be remembered ....lol

SP after this raise will be bottom of this cycle ...imo ...I am keeping my powder dry for getting back in ....Mr B was happy to get in at 1.80 then realised its not yet time so changed his tune but his followers still stuck ...:p

[nztx]

What's another Cap Raise going to do to the SP given presumably that the fancier preferred hybrid
Fund raiser to plug some gaps fell off the table when Credit US & Swiss got a bit of a cold ? ;)

[Ggcc]

I just spoke to someone who spoke with a broker and apparently Heartland has already raised cash? Has anyone spoken to a broker who can say this is correct.

[bull....]

like all banks hgh will suffer going forward

[RTM]

like all banks hgh will suffer going forward

Not sure the pain is going to be limited to just Banks Bull. Many companies and industries are going to suffer with a recession.

[Jaa]

Don't tell winner but dairy prices down 4.7% today too....

https://www.interest.co.nz/rural-news/120647/although-china-buying-its-demand-not-raising-dairy-prices-milk-and-product-out

[winner69]

Don't tell winner but dairy prices down 4.7% today too....

https://www.interest.co.nz/rural-news/120647/although-china-buying-its-demand-not-raising-dairy-prices-milk-and-product-out

Jeez ….OCR up more than expected AND dairy prices down.

What a combo

HGH share price in May?

[nztx]

Jeez ….OCR up more than expected AND dairy prices down.

What a combo

HGH share price in May?


will another Cap Raise be needed ? :)

[Simsee]

will another Cap Raise be needed ? :)
This just now from Chris Lee.
I fully agree with his summary and look forward to Jeff continuing to be Jeff.
Onwards and upwards and a great time to buy, happy Easter all
“
In recent days, some in the market have been guessing that Heartland Bank might have a rights issue.

Heartland is awaiting news that it has been granted an Australian banking licence. When this is granted, Heartland may confirm acquisitions which will enable it to expand into various niches of Australian banking.

It may need more capital to do this. It has previously declared its plan to raise Tier Two capital.

Some in the NZ market have reached the view that Heartland will have to resort to a rights issue when it gets its licence, instead of a Tier Two note issue.

The market has gained conviction about this guess because it expected global banking frailties to put an end to any plan held by a bank like Heartland to offer Tier One, loss-absorbing bonds, such as Credit Suisse had offered, prior to its collapse.

One wonders if the market’s assumptions are wrong.

Heartland currently has ample capital and might wish to offer what I call ‘’temporary capital’’ by offering Tier Two notes, a hybrid product, not the same as Tier One, loss-absorbing bonds.

The concept of issuing Tier Two is founded on the company belief that it will make future profits that enable the company to generate revenue reserves, in effect replacing ‘’temporary’’ Tier Two capital with future accumulated profits.

If global banking tremors ease, it is absolutely feasible that Heartland might issue Tier Two notes, move forward with its Australian expansion, and thus create more ‘’capital’’ to fund the growth without any need to raise share capital.

Those institutions trying to second guess Heartland’s plans by short-selling Heartland’s shares may well find, like Posie Parker, that they have tomato sauce on their toupees.

Heartland has been extremely well managed for more than a decade, has skilfully delivered each year more profit and dividends than it ever promises, has built a growing credit rating, and to be blunt, has been smarter than the big banks, ahead of the curve in several areas, finding lending niches and delivery systems that have been clever.

It has built a digital business requiring very little expenditure on branch representation. It is probably fair to say that other banks somewhat resent the nimbleness of Heartland.

It dominates the profitable reverse mortgage market and has managed its liquidity cleverly.

My own view is that it should more regularly offer 3, 4 or 5-year bonds, to strengthen the match between deposits and loans, but Heartland has proved itself adept at maintaining a very liquid business, its capital and liquidity ratios better than most of its competitors.

Recently, it lost a stalwart when its long-serving chairman Geoff Ricketts died suddenly. As new chair Greg Tomlinson will be an outstanding replacement, Tomlinson being from the very top drawer of New Zealand’s business leaders.

If Heartland issues Tier Two bonds, probably at rates of around 7.00%, I will be a buyer.

If the short sellers retreat, having burnt a few bob at the Totalisator window, I will not be present at the Wailing Wall.

_ _ _ _ _ _ _ _ _ _ _ _“

[bull....]

This just now from Chris Lee.
I fully agree with his summary and look forward to Jeff continuing to be Jeff.
Onwards and upwards and a great time to buy, happy Easter all
“
In recent days, some in the market have been guessing that Heartland Bank might have a rights issue.

Heartland is awaiting news that it has been granted an Australian banking licence. When this is granted, Heartland may confirm acquisitions which will enable it to expand into various niches of Australian banking.

It may need more capital to do this. It has previously declared its plan to raise Tier Two capital.

Some in the NZ market have reached the view that Heartland will have to resort to a rights issue when it gets its licence, instead of a Tier Two note issue.

The market has gained conviction about this guess because it expected global banking frailties to put an end to any plan held by a bank like Heartland to offer Tier One, loss-absorbing bonds, such as Credit Suisse had offered, prior to its collapse.

One wonders if the market’s assumptions are wrong.

Heartland currently has ample capital and might wish to offer what I call ‘’temporary capital’’ by offering Tier Two notes, a hybrid product, not the same as Tier One, loss-absorbing bonds.

The concept of issuing Tier Two is founded on the company belief that it will make future profits that enable the company to generate revenue reserves, in effect replacing ‘’temporary’’ Tier Two capital with future accumulated profits.

If global banking tremors ease, it is absolutely feasible that Heartland might issue Tier Two notes, move forward with its Australian expansion, and thus create more ‘’capital’’ to fund the growth without any need to raise share capital.

Those institutions trying to second guess Heartland’s plans by short-selling Heartland’s shares may well find, like Posie Parker, that they have tomato sauce on their toupees.

Heartland has been extremely well managed for more than a decade, has skilfully delivered each year more profit and dividends than it ever promises, has built a growing credit rating, and to be blunt, has been smarter than the big banks, ahead of the curve in several areas, finding lending niches and delivery systems that have been clever.

It has built a digital business requiring very little expenditure on branch representation. It is probably fair to say that other banks somewhat resent the nimbleness of Heartland.

It dominates the profitable reverse mortgage market and has managed its liquidity cleverly.

My own view is that it should more regularly offer 3, 4 or 5-year bonds, to strengthen the match between deposits and loans, but Heartland has proved itself adept at maintaining a very liquid business, its capital and liquidity ratios better than most of its competitors.

Recently, it lost a stalwart when its long-serving chairman Geoff Ricketts died suddenly. As new chair Greg Tomlinson will be an outstanding replacement, Tomlinson being from the very top drawer of New Zealand’s business leaders.

If Heartland issues Tier Two bonds, probably at rates of around 7.00%, I will be a buyer.

If the short sellers retreat, having burnt a few bob at the Totalisator window, I will not be present at the Wailing Wall.

_ _ _ _ _ _ _ _ _ _ _ _“

this dude away with the fairies lol and is obviously long and hurting
does not even seem to mention how the banking crisis and economic downturn will effect hgh
shorting the stock has done very well for those people who can do it ( they obviously have read the tea leaves well )

[nztx]

https://www.nzherald.co.nz/business/heartland-buys-australias-challenger-bank-for-a36m/M4QUO4J6FUODCHYBZC3AWDWQTE/

Heartland buys Australia's Challenger Bank for A$36m


20 Oct, 2022 05:20 PM


How is Heartland #2 of Australia going ?

Will it need some buckets of extra beans poured into the tin to grow further and furiously like it's NZ parent ? :)

The Aussie tins are bigger than their counterparts on these shores though .. so that the RBA dont have to strain their eyes to see them among the sunburnt extremes between the rock to the sea .. ;)

[Grimy]

Heartland Bank Limited (HBL) has announced that it is considering an offer of subordinated notes. 10 year (possible repayment after 5) around 7%

[percy]

Heartland Bank Limited (HBL) has announced that it is considering an offer of subordinated notes. 10 year (possible repayment after 5) around 7%

As signalled in their 28th February announcement;
https://www.nzx.com/announcements/407458

[Grimy]

Sounds like it is opening next week.

[percy]

Sounds like it is opening next week.

The offer is expected to open on 17 April 2023 and close on 21 April 2023. The Notes are expected to
be issued on 28 April 2023 and quoted on the NZX Debt Market on 1 May 2023.

[BlackPeter]

Heartland Bank Limited (HBL) has announced that it is considering an offer of subordinated notes. 10 year (possible repayment after 5) around 7%

Unfortunately - they are rated BB+ ... this is junk bond status.

Will be interesting to see whether paying just the rate of inflation for these bonds attracts enough risk happy investors. Little gain, but all the pain ...

Note: Heartland itself is rated BBB - which is still investment grade, but these bonds are basically designed to act as "buffer" for Heartland if things turn pear-shaped.

Interesting times. I think I will abstain.

[bull....]

yep junk bonds
they say in the event of default you will likely get nothing and add in they also say if bank bill go negative you will likely receive no int payment lol you can hold the junk bond for years and get zero payment :scared:

[Rawz]

Junk bonds??? Rough. BB rated bonds have a 1 in 10 chance of failing. Not sure how much the '+' adds.

see table in link here https://www.rbnz.govt.nz/regulation-and-supervision/oversight-of-banks/standards-and-requirements-for-banks/bank-credit-ratings

[Simsee]

Junk bonds??? Rough. BB rated bonds have a 1 in 10 chance of failing. Not sure how much the '+' adds.

see table in link here https://www.rbnz.govt.nz/regulation-and-supervision/oversight-of-banks/standards-and-requirements-for-banks/bank-credit-ratings
I agree. I also note that they are not seeking public subscriptions. Jeff is just being Jeff. They will have the $ all locked up from the brokers and big boys. Meanwhile the short sellers of HGH just might be feeling a bit ill.

[alokdhir]

From this issue and its ratings and market outlook about them even at 7% coupon ...it is conveying whats the actual position of the business at the moment ...it is still not the start of real bad times as yet ...but agreed its almost reaching there for banks at least ...with business evaporating fast and credit even faster ...Most difficult phase for HGH is round the corner ...hopefully they will manage it better ...Jeff needs to impress W69 again ...He was his best supporter but now his confidence is down...but this is the time to show and win his respect back ....fingers crossed ....Inside knowledge ...Banks in NZ have started the exercise of laying off people and drastic cost cuttings are being planned ahead ...

[bull....]

yep my fire power waiting at covid lows , see the imf downgraded world growth again today ... including nz

all banks will be fighting hard soon over shrinking pool

[Balance]

yep my fire power waiting at covid lows , see the imf downgraded world growth again today ... including nz

all banks will be fighting hard soon over shrinking pool

Plenty of money out there - plenty sitting in cash.

[Balance]

I agree. I also note that they are not seeking public subscriptions. Jeff is just being Jeff. They will have the $ all locked up from the brokers and big boys. Meanwhile the short sellers of HGH just might be feeling a bit ill.

Good point - shorters are going to have to cover.

[BlackPeter]

Junk bonds??? Rough. BB rated bonds have a 1 in 10 chance of failing. Not sure how much the '+' adds.

see table in link here https://www.rbnz.govt.nz/regulation-and-supervision/oversight-of-banks/standards-and-requirements-for-banks/bank-credit-ratings


I agree. I also note that they are not seeking public subscriptions. Jeff is just being Jeff. They will have the $ all locked up from the brokers and big boys. Meanwhile the short sellers of HGH just might be feeling a bit ill.

Here is the definition from the CFI website (and as I understand agreed with the rating agencies):

14535

https://corporatefinanceinstitute.com/resources/fixed-income/junk-bonds/

I understand that shareholders tend to fall in love with their stock and don't want to see it associated with a negative word like junk. However - they need to understand as well that this classification is for the bonds only, not for the shares.

However - these subordinated bonds are per definition clearly junk bonds. Best category of junk, but still junk. Does not mean that they must default, but it means that they are a high risk investment ... and this is in times of banking trouble not always the most prudent way to park ones money.

The other question is - if you really want to put your principal at a high risk ... is the reward of getting the inflation (minus taxes) paid by the bank enough to do that?

[bull....]

Plenty of money out there - plenty sitting in cash.

im meaning shrinking pool of people who want to borrow money

[Muse]

im meaning shrinking pool of people who want to borrow money

There will be compressing demand for some types of loans and or perhaps more appropriately reduced appetite for Heartland to provide lending for others (started pulling back on SME lending last year, personal lending for sometime, etc), but still good growth in others. Largest division, reverse mortgages, is very likely an immediate beneficiary of inflationary and cost of living crisis, evidenced by the near 25% annualised growth in the book from June22toDec22 (an acceleration). Going well off a very low base in targeting the mortgage refi market which should benefit a bit as CCCFA regs have been reworked. HGH growing well in motor receivables although pricing getting competitive (& am guessing it will slow eventually). Bits and bobs, yings and yangs, ups and downs, but ultimately see a growing book, underpinned by RMs. In last 6 months, HBL (NZ) grew its gross receivable book 2.4x that of the aggregate market. But must acknowledge there are headwinds in various segments and its prudent to reduce originations in those. My meandering thoughts only.

[davflaws]

There will be compressing demand for some types of loans and or perhaps more appropriately reduced appetite for Heartland to provide lending for others (started pulling back on SME lending last year, personal lending for sometime, etc), but still good growth in others. Largest division, reverse mortgages, is very likely an immediate beneficiary of inflationary and cost of living crisis, evidenced by the near 25% annualised growth in the book from June22toDec22 (an acceleration). Going well off a very low base in targeting the mortgage refi market which should benefit a bit as CCCFA regs have been reworked. HGH growing well in motor receivables although pricing getting competitive (& am guessing it will slow eventually). Bits and bobs, yings and yangs, ups and downs, but ultimately see a growing book, underpinned by RMs. In last 6 months, HBL (NZ) grew its gross receivable book 2.4x that of the aggregate market. But must acknowledge there are headwinds in various segments and its prudent to reduce originations in those. My meandering thoughts only.

Very useful meanderings. Thank you.

[winner69]

Global dairy prices up in overnight auction ….whole milk powder up a solid 5.0%

Bodes well for a higher HGH share price in a month or two

[alokdhir]

Global dairy prices up in overnight auction ….whole milk powder up a solid 5.0%

Bodes well for a higher HGH share price in a month or two

Still waiting for your $ 2 SP call months ago buddy ....Xmas gone ...Easter gone ...maybe by coming Xmas ...Hope is eternal ....lol :p

[winner69]

Still waiting for your $ 2 SP call months ago buddy ....Xmas gone ...Easter gone ...maybe by coming Xmas ...Hope is eternal ....lol :p

Banks went out favour ..I can’t fix that lol

However Heartland hopefully will do better than BNZ Bank of New Zealand who ‘eked out a 13.5% increase in first-half profit as widening margins’

Nothing like fattening margins and profit increases

Won’t put a share price target but the way things are I don’t think we’ll see 2 bucks for a while …maybe not even next year

[alokdhir]

Banks went out favour ..I can’t fix that lol

However Heartland hopefully will do better than BNZ Bank of New Zealand who ‘eked out a 13.5% increase in first-half profit as widening margins’

Nothing like fattening margins and profit increases

Won’t put a share price target but the way things are I don’t think we’ll see 2 bucks for a while …maybe not even next year

Now that u have given up on $ 2 then it may happen sooner ...lol ...thats how markets work most of the time ...Yes small banks really out of favour as many failed overseas ...

[Rawz]

The ishares regional bank etf (IAT) is down 40% in the last 6 months.

HGH only down 8%

HGH a shining light

[percy]

Article refers to Australian Banks,however NZ Banks answer to RBNZ which has similar reporting requirements.
https://sharecafe.us14.list-manage.com/track/click?u=c2c1464dc7900c4f66c3a574d&id=dd5459ed1a&e=338561e893

[Rawz]

Article refers to Australian Banks,however NZ Banks answer to RBNZ which has similar reporting requirements.
https://sharecafe.us14.list-manage.com/track/click?u=c2c1464dc7900c4f66c3a574d&id=dd5459ed1a&e=338561e893

great article thanks for sharing

[winner69]

Now that u have given up on $ 2 then it may happen sooner ...lol ...thats how markets work most of the time ...Yes small banks really out of favour as many failed overseas ...


About to go under 150 I reckon

That 2 bucks a pipe dream now

so beaten up Hgh could get on to that famous Bakers Dozen list (that Craig’s put out ) as a stock to outperform

[winner69]

Aussie banks reported profit gains in NZ (depend on which profit measure you use) and increasing NIM

Hope Jeff delivers increased profits (we’ll use the profit measure that’s best ) and higher NIM

[Ggcc]

About to go under 150 I reckon

That 2 bucks a pipe dream now

so beaten up Hgh could get on to that famous Bakers Dozen list (that Craig’s put out ) as a stock to outperform

Only 2 more cents and you are there. I am still holding on, as I bought lower and have no intention of selling yet unless their story changes. I might just add more to my portfolio if prices go lower than my purchase price.

[Muse]

HGH still banging around 150-160 level.

Just over 5 weeks until year end. I'd imagine if they hit guidance it will be towards the bottom and likewise expect it might come in below. Vehicle lending quite competitive at the moment and I doubt they will have time to fully recover interest costs from their T2 subnote issue (takes time to reprice loans) together with some extra buffer for impairments.

Team has a good track record in meeting guidance but can't pull one out of the hat every time.

disc: still holding.

[Simsee]

HGH still banging around 150-160 level.

Just over 5 weeks until year end. I'd imagine if they hit guidance it will be towards the bottom and likewise expect it might come in below. Vehicle lending quite competitive at the moment and I doubt they will have time to fully recover interest costs from their T2 subnote issue (takes time to reprice loans) together with some extra buffer for impairments.

Team has a good track record in meeting guidance but can't pull one out of the hat every time.

disc: still holding.

I’d bet $ to donuts Jeff and the team will come through. Why? Because he always has. Way undervalued and a bargain at these $.

[ziggy415]

The beagle will be drooling in his dinner bowl with a PE this low, backing the truck up i bet

[Snoopy]

I’d bet $ to donuts Jeff and the team will come through. Why? Because he always has. Way undervalued and a bargain at these $.


But can Jeff continue to do a 'Jeff' 'doing what he says he will do' without the wise overseeing guidance of the dearly departed Geoff? I think the result could still be in Jeffardy!

SNOOPY

[Airw0lf]

I see that HGH isn't one of the banks participating in 7 day settlement...

[Valuegrowth]

Look like it's building a base. If it stay building base for some time then we can be happy. If it drops below 1.50 NZD it can go further south.

[justakiwi]

Yes, disappointing. Their processing times already lag behind the other banks. This will put them even further behind.


I see that HGH isn't one of the banks participating in 7 day settlement...

[Snoopy]

I see that HGH isn't one of the banks participating in 7 day settlement...


Not surprising since Heartland don't do any banking functions for themselves. It is all outsourced to Westpac, in which case they should be in the 7 day settlement system?

SNOOPY

[alokdhir]

https://www.nzherald.co.nz/business/mary-holm-a-reverse-mortgage-on-your-home-nice-little-earner-or-risky-trap/3B4OCHPWANBQTPF3N6S4HRDE6M/

Fair points about reverse mortgages ...

[Perky]

Not surprising since Heartland don't do any banking functions for themselves. It is all outsourced to Westpac, in which case they should be in the 7 day settlement system?

SNOOPY

Yes interesting as rabobank sent me an email saying they would be doing inwards payments on 7 days but not outwards payments. Both hland and rabo probably can’t be bothered paying someone to go and push the transfer buttons on the weekend lol

Both rabo and hland only offer mon - fri business hours customer support I think.

[percy]

https://www.nzherald.co.nz/business/mary-holm-a-reverse-mortgage-on-your-home-nice-little-earner-or-risky-trap/3B4OCHPWANBQTPF3N6S4HRDE6M/

Fair points about reverse mortgages ...

Agree.Fair points.

ps.Thank you Christchurch City Libraries for letting me access this NZ Herald article via PressReader.

[justakiwi]

Given the current discussion re Sharesies, just ignore the fact that this is one of their podcasts - the guy doing the interview is actually from Business Desk.

Quite an interesting podcast - different angle than what we are used to as shareholders, but I found it very helpful, and learned a thing or two I wasn't aware of before.

https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9 (https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9)

Jeff is a good speaker.

[percy]

Given the current discussion re Sharesies, just ignore the fact that this is one of their podcasts - the guy doing the interview is actually from Business Desk.

Quite an interesting podcast - different angle than what we are used to as shareholders, but I found it very helpful, and learned a thing or two I wasn't aware of before.

https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9 (https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9)

Jeff is a good speaker.

Excellent informative interview.
Thanks for the link.

[Onemootpoint]

Given the current discussion re Sharesies, just ignore the fact that this is one of their podcasts - the guy doing the interview is actually from Business Desk.

Quite an interesting podcast - different angle than what we are used to as shareholders, but I found it very helpful, and learned a thing or two I wasn't aware of before.

https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9 (https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9)

Jeff is a good speaker.

Interesting.
Thanks for the link.

[Airw0lf]

I hate to say this again but Heartland's app is truly, truly terrible. Every time I try to do something meaningful with it I discover a new bug. Today I tried to transfer $0.15 out of a Notice Saver account (I wanted to empty out the dregs to tidy up my accounts) and was greeted with the attached error. Utterly ludicrous.

[Airw0lf]

I hate to say this again but Heartland's app is truly, truly terrible. Every time I try to do something meaningful with it I discover a new bug. Today I tried to transfer $0.15 out of a Notice Saver account (I wanted to empty out the dregs to tidy up my accounts) and was greeted with the attached error. Utterly ludicrous.I understand the strategy behind the new app to reduce cost to serve. But if I am anything to go by, aspects of it are very much a pipe dream.

[justakiwi]

That’s weird. I am one of those annoying people who sometimes transfer small amounts, as I like round numbers :D but I have never seen this message and my transfers have always been accepted.

I just did one now to test it, and it worked fine (1c)

EDIT: oh! You were doing it from a Noticesaver. You can’t transfer from that account without giving the required notice.


I hate to say this again but Heartland's app is truly, truly terrible. Every time I try to do something meaningful with it I discover a new bug. Today I tried to transfer $0.15 out of a Notice Saver account (I wanted to empty out the dregs to tidy up my accounts) and was greeted with the attached error. Utterly ludicrous.

[Swala]

Given the current discussion re Sharesies, just ignore the fact that this is one of their podcasts - the guy doing the interview is actually from Business Desk.

Quite an interesting podcast - different angle than what we are used to as shareholders, but I found it very helpful, and learned a thing or two I wasn't aware of before.

https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9 (https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9)

Jeff is a good speaker.

Thanks very much for posting this, a very insightful interview.

[Airw0lf]

That’s weird. I am one of those annoying people who sometimes transfer small amounts, as I like round numbers :D but I have never seen this message and my transfers have always been accepted. I just did one now to test it, and it worked fine (1c)EDIT: oh! You were doing it from a Noticesaver. You can’t transfer from that account without giving the required notice.Yes that's right. I've given the "notice" prior to the error turning up - the app schedules the payment for one day after the notice period ends, which all makes sense and I have actually done this many times before. But today it gives me this bizarre transfer limit error.

[gypsy]

Thanks for the link, very interesting.

[Onemootpoint]

Yes that's right. I've given the "notice" prior to the error turning up - the app schedules the payment for one day after the notice period ends, which all makes sense and I have actually done this many times before. But today it gives me this bizarre transfer limit error.

it’s clear you exceeded your $1 million daily limit by 15c. :eek2: I too have that problem…..in my dreams :)

[Snoopy]

Quite an interesting podcast - different angle than what we are used to as shareholders, but I found it very helpful, and learned a thing or two I wasn't aware of before.

https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9 (https://podcasters.spotify.com/pod/show/sharesies/episodes/A-small-bank-in-a-big-bank-world-with-Heartland-Group-e24vis9)

Jeff is a good speaker.


My own selected notes from this podcast

Quotes from Jeff
"Fairly early on we made the decision that we wouldn't succeed by being a smaller version of a bigger bank."
"Scale, branch networks and lots of people are things we don't have."

I hate to say it but many of the big banks do not have scale any more. I spend some time in the Kapiti district where I own a half share in a house. In the particular community where I hang out (Waikanae) only Kiwibank and ANZ are left. And the ANZ only has limited hours two days per week. During the strictest lockdowns I had to drive for 30 minutes to get to my own nearest bank branch (Westpac). This was so unsatisfactory, it will necessitate me changing banks after close to 40 years I think (although it must be said I never joined Westpac, it was Trusteebank Canterbury back in the day). Other priorities mean I am only just rolling out my account changes next month. But the Westpac bank network is almost completely gutted. There is only one branch open for full banking hours in the whole of Wellington City now, as an example. Wellington suburbs have largely lost their branches entirely, although Kilbirnie and Johnsonville hang on with very restricted hours for a few days a week. The reason why I mention this in detail, is that Heartland are using Westpac to conduct what were Heartland bank functions on behalf of their clients. And with the Westpac footprint largely gone, Heartland are in effect a fully on-line bank already.

"We made the decision fairly early on to dispatch with our branch network, and to digitalize our business."
Closing of the Heartland branches -on a 3 or 4 billion dollar book of deposits-, saw Heartland lose only $20m of customer deposits in that 'bad week'. It seems a bit odd that Heartland's impact on the decision to close their branches could be measured over just the one week after they announced that decision. But I digress.

Branch closures are fine for some. But not being a fan of digital banking for security reasons, it means I will never open an account with Heartland myself (despite being a shareholder), as I have little confidence in their 'paid back up branch network' over at Westpac.

Talking about product offerings:
"(Heartland decided to) adopt a best or only strategy."

I am fully behind this and approve of Heartland adopting "reverse mortgages (Of the $6.5b total Heartland loan book, about $2b is in reverse mortgages across both Australia ($1.2b) and New Zealand ($0.8b), motor finance (counted as coming under the household sector umbrella) and livestock funding (currently $1.1b of the loan book)" as targeted markets. Furthermore there are $2.3b in 'other business loans' on the books. But motor vehicle financing seems to be motor dealer group initiated (nothing wrong with that although I question if such dealer funding provides a sufficient business case moat) and the livestock funding seems almost a legacy 'wind down' business (PGG Wrightson's new GoLivestock finance arm was created because Heartland farm business loans, which PGG Wrightson used to use, were just taking too long to process). Jeff makes a foot-shot later in the interview when talking about the risks of lending to Small and Medium Enterprise business customers (35% of the Heartland loan book).
"SME is high risk, and every company is slightly different. There is always a nuance that you need and the average loan balances aren't particularly high. There is not enough scale in lending to justify all the associated costs and risks"

Back on the topic of Heartland's niche loan products of interest.
"We sell our customers one product at a time. We don't try to cross sell which allows our team to be totally focussed on what we need to do."

"If we can do something on a mobile phone via an app, it is the best way of doing things."
"The waiting times in bank branches are somewhere between 20 minutes and 40 minutes. Not a great experience."

The above is a self fulfilling prophecy. Provide poor service in a physical branch and suddenly a digital interaction looks better. As Jeff notes, digital interactions are more cost efficient from a bank perspective, which is the real reason for pushing banking services on line.

Moving onto deposits
"Heartland are underweight at the short end of the market, at call and around the 30 day level compared to other banks. The reason being that we don't offer transactional banking services so we don't need that short term money. Nevertheless the short term of the market is the lowest cost of funds, which is why the term rates we do offer can be very rate competitive."

Notwithstanding the above, the higher interest rates that Heartland charge over and above the big banks (because Heartland do not compete hard in the low margin conventional mortgage market) allow them to feed more of that 'loan income' down to depositors, while still retaining a high net interest margin to reflect loan risk.

"Smaller banks tend to have a cost to income ratio of 60 cents in the dollar, whereas Heartland's is 42 cents. This is a similar cost to income ratio that is achieved by larger banks, which we have achieved with technology."
"From the early days of Heartland bank the loan book has expanded by three times, but profitability growth has been five times."

On the move into reverse mortgages, particularly into Australia
"It is much better to buy reverse mortgages rather than start the business up, because interest capitalizes (is added to the loan) and the book (Loan balances) on average pay back (only) after 7 or 8 years."
"From a lenders perspective there is no cash returned for several years, so you need a deep pocket of cash to start the business up." "The Challenger bank acquisition in Australia is to allow Heartland to tap into that vast pool of retail depositors to gradually replace the wholesale funding arrangements that are in place to support the growth of Australian reverse mortgages now."

Current market share in Australia for reverse mortgages is 37% (the largest of any player) but spend is probably 100% of the total Australian sector marketing budget (IOW competitors are small and passive). Loan to value ratios of the reverse mortgage book are currently sitting at 20%. To get a picture of outlier risk, in all of Australia there are currently only two borrowers with a loan to value ratio >75%, and none in New Zealand. Despite the current market being 'the tail end of the baby boomers', the projection is for the market for the growth in the reverse mortgages to continue before levelling off in the late 2030s. The current total market in Australia is about $3.4b. But the potential, with more market awareness, Heartland believes is between $10b to $15b.

The listing of Heartland in Australia is purely to allow Australian institutions who have a mandate to invest only in Australian listed entities to participate in Heartland capital and debt raisings.

SNOOPY

[Rawz]

I’ve been to a bank branch once in the last 15 years I reckon

[thegreatestben]

Yep agreed, I'm considered a significant banking customer with BNZ and never once stepped in a branch. I don't need cash, what even is a cheque?
Did all of our development finance in a cafe, relationships don't count for anything in the decisions of banks now.

Meet with our personal manager over teams, she's based in the Hawke's Bay. Introduced to her via our broker who I've only spoken to on the phone because he's based in the Manawatu.

[Snoopy]

Yep agreed, I'm considered a significant banking customer with BNZ and never once stepped in a branch. I don't need cash, what even is a cheque?
Did all of our development finance in a cafe, relationships don't count for anything in the decisions of banks now.

Meet with our personal manager over teams, she's based in the Hawke's Bay. Introduced to her via our broker who I've only spoken to on the phone because he's based in the Manawatu.


The problem, with the full commoditization of banks, is that by closing down the branch networks, the commoditisation is largely self inflicted. You fit in as the digital 'cookie cutter customer' or you do not. Carry on down this path and the fact you are a 'large bank' with a history counts for nix, because your cost base is higher and you are pissing off your traditional customer base.

There are some areas where you do need to go into a branch, like overseas currency payments into nominated accounts. I had to do it last week and it cost $28 (ANZ this time) and well over half an hour once I had waited in the queue. And then the teller had to call on back up help to do such a complex thing. If it wasn't for the complication of dealing with financial issues, I am sure most banks would offer far better service. However, the ANZ service was one better than Westpac who simply refused to process my overseas transaction, because I didn't feed my 'salary' through the current account I had with them. This is despite all my dividends and contract work payments going into the said account as they had done for years (I don't have a salary, and haven't had for decades).

SNOOPY

[thegreatestben]

I’d like to see demographics of heartland banks customer. It seems like the only person it can and wants to service is simple, average Joe who doesn’t have overseas currency payments to make or any investment properties.

If I just had one, smallish mortgage it would be an idea service for me but those days are long gone.

How about that 5% boost today though :)

[justakiwi]

I imagine that a fair few customers will simply be those chasing a higher deposit interest rate. People like me, so yes, simple average Joe people ;)

As I have mentioned before, I have multiple bank accounts with multiple banks, for multiple purposes. I consider banks to be nothing more than a “tool” for money management. I have zero need for branches and do everything online, so a digital only bank works fine for me.



I’d like to see demographics of heartland banks customer. It seems like the only person it can and wants to service is simple, average Joe who doesn’t have overseas currency payments to make or any investment properties.

If I just had one, smallish mortgage it would be an idea service for me but those days are long gone.

How about that 5% boost today though :)

[fish]

I imagine that a fair few customers will simply be those chasing a higher deposit interest rate. People like me, so yes, simple average Joe people ;)

As I have mentioned before, I have multiple bank accounts with multiple banks, for multiple purposes. I consider banks to be nothing more than a “tool” for money management. I have zero need for branches and do everything online, so a digital only bank works fine for me.

So sensible to have such a system .
My wife was scammed just before christmas-a text message posing as the IRD and they emptied our joint accounts in a few minutes before our accounts were closed .
Took a week before we knew it was all recovered and accounts re-opened .
Intend to open a highlands account today !

[Bjauck]

The problem, with the full commoditization of banks, is that by closing down the branch networks, the commoditisation is largely self inflicted. You fit in as the digital 'cookie cutter customer' or you do not. Carry on down this path and the fact you are a 'large bank' with a history counts for nix, because your cost base is higher and you are pissing off your traditional customer base.

There are some areas where you do need to go into a branch, like overseas currency payments into nominated accounts. I had to do it last week and it cost $28 (ANZ this time) and well over half an hour once I had waited in the queue. And then the teller had to call on back up help to do such a complex thing. If it wasn't for the complication of dealing with financial issues, I am sure most banks would offer far better service. However, the ANZ service was one better than Westpac who simply refused to process my overseas transaction, because I didn't feed my 'salary' through the current account I had with them. This is despite all my dividends and contract work payments going into the said account as they had done for years (I don't have a salary, and haven't had for decades).

SNOOPYI think Overseas Swift transfers (telegraphic transfer) into your existing account can be done without a visit. Fees are usually charged at both ends. Cheques and cash are obviously different. Are foreign cheques even accepted these days?

I remember several decades ago an Ulster Irish relative sending me a cheque as a gift. It took ages for the foreign currency forms to be filled in duplicate or triplicate by the bank teller at a large Auckland branch of the ANZ. These then had to be checked by the manager, who was in a meeting. It was a long low-tech process, using hand calculators I hadn't seen since the 1980's!

[Balance]

Worth noting : Fitch downgrades Outlook for Australasian banks

https://www.skynews.com.au/business/fitch-downgrades-outlook-for-banks-in-aust-and-nz/video/6b77e73d521b7146cee9b6c2047bc9f2

[thegreatestben]

The quote from Fitch in that story states:

"In both countries [Aus|NZ], the risk of a sharper-than-expected economic slowdown and higher unemployment remans a key threat for bank metrics, particularly if this were to push house prices lower than we project"

Could be valid headwinds for HGH but overall they have much lower ratio of residential mortgage lending compared to the big aussie banks.

[GTM 3442]

The problem, with the full commoditization of banks, is that by closing down the branch networks, the commoditisation is largely self inflicted.

<snip>

There are some areas where you do need to go into a branch, like overseas currency payments into nominated accounts. I had to do it last week and it cost $28 (ANZ this time) and well over half an hour once I had waited in the queue. And then the teller had to call on back up help to do such a complex thing.

<snip>

SNOOPY

Which bank are you with?

Our circumstances are probably different, but I use Westpac and the only transaction I can't do online is when I'm sending NZD with no conversion. Which is, of course, the one I do most often

[Snoopy]

Which bank are you with?


I use:
a/ Kiwibank for some rainy day emergency access fund term deposits (these are PIEs),
b/ Westpac for my cheque (yes they still call it that) account,
c/ TSB for my instant access cash money interest paying call account, TSB again as a holding pen for some reinvestment money (currently on one year term deposit) for an investment that came good a few years back, but I am nevertheless in the process of redeploying (it is taking a while) AND
d/ ANZ for a foreign currency term deposit AND for my VISA card



Our circumstances are probably different, but I use Westpac and the only transaction I can't do online is when I'm sending NZD with no conversion. Which is, of course, the one I do most often.


I should make it clear that Westpac at the time (around four years ago I think) refused to cash an overseas cheque -for the equivalent of $1500 IIRC-, on my behalf. But this was not a general policy, as they would cash such cheques for other people at the time. The teller basically screwed up her face, went and checked with her supervisor and simply said they were not going to cash my cheque,

The excuse was that because I didn't have my salary going into the account (even though I didn't have a salary at the time, and hadn't had for twenty years previously- I did irregular contract work-, but nevertheless had several other payments adding to tens of thousands of dollars going into the account every year) i.e. it was my main everyday bank account. Westpac just weren't prepared to extend their overseas exchange facilities to me on that day. I had cashed cheques from the UK like that before with Westpac and none had ever bounced or caused any trouble. I was not in any form of disagreement with the bank on other matters which may have been brought to a head by this 'outrageous request' (cashing an overseas cheque). There were quite a few thousand dollars in the account at the time (i.e. I wasn't a rats and mice customer that they were serving out of 'duty'). Suffice to say I was rather stunned at having my overseas cheque rejected. And given the teller I was facing had consulted with her manager, this was clearly bank policy to no longer process 'difficult' requests from customers like me, not the actions of a 'rogue' teller. When I protested and threatened to close my account and leave the bank, the teller just said 'off you go then' with a stoney face. Quite frankly, I was floored at my treatment.

I guess they thought that my threat to close my account was just an empty threat, and with 'life' getting the way, so far it has been. But the dismantling of the Westpac nationwide branch network, even more so than the other big banks, has been the final trigger in me actively arranging to leave. That and charging me $25 for every transaction when paying a bill outside of internet banking (which I don't have). I am going to ANZ for my current account now. But even then it is not an easy process. I have to wait forty days for an appointment, even though I am a current ANZ customer!

Finally, just to keep on thread topic, you can probably see why I wouldn't open a Heartland account, while Westpac is their everyday banking agent. And this is not just my opinion. If you look at independent consumer customer satisfaction surveys:

https://www.consumer.org.nz/articles/bank-satisfaction-survey-2022

"Westpac stood out for the lowest satisfaction rating this year (54%). It scored significantly below average for branch service: 20% of customers were dissatisfied, compared with the industry average of 14%. It also had the lowest rating for phone, branch and mobile banking. Of those who had a problem with Westpac in the past 12 months, 69% said it was handled poorly."

Westpac comes in dead last for retail customer satisfaction, and has done for many years.

SNOOPY

P.S. Sorry about the rant. But I feel better now!

[GTM 3442]

Oh, I wouldn't worry about the rant if I were you. I'm happy, I've learnt something - as I usually do from you.

I've never found myself in the position of having to receive cheques from overseas, but I can imagine that the New Zealand banking fraternity are quite capable of making a dunghill out of a molehill.

[Simsee]

I note $1.70 today and recall the naysayers predicting a slump under $1.50.

[thegreatestben]

glimpses of $1.71 :)

I bought a few between $1.50 - $1.60, was ready to pick up a few more but will keep some powder dry for now.

[winner69]

I note $1.70 today and recall the naysayers predicting a slump under $1.50.

Good on you

Though $1.50 will happen one day and then you will be able to buy even more

[Simsee]

Good on you

Though $1.50 will happen one day and then you will be able to buy even more
Gets under $1.50 and I’ll be backing the b train up for more

[Simsee]

Gets under $1.50 and I’ll be backing the b train up for more
A good .10c lift on the ASX today, brings them in line with the NZX

[777]

Good on you

Though $1.50 will happen one day and then you will be able to buy even more

You could be right after a 10 for 1 share split.

[winner69]

Way Harmoney share price going Heartland will need to take another $1m-$2m in 2nd half to add to the $2.4m they ‘lost’ in first half.

Just as well they don’t count this sort of stuff ….not normal …..but way HMY going it does seem normal :)

[Ggcc]

Way Harmoney share price going Heartland will need to take another $1m-$2m in 2nd half to add to the $2.4m they ‘lost’ in first half.

Just as well they don’t count this sort of stuff ….not normal …..but way HMY going it does seem normal :)

You think it would be wise for HGH to consider buying all of HMY or at least some more of them?

[Fortunecookie]

............deleted

[percy]

Another excellent presentation.
Good to see;Annualised 12% motor book growth sustained over last 6 months.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/413345/396756.pdf

[thegreatestben]

Are you watching the ASX CEO Connect chat?
Jeff is great representative of HGH, he speaks well and seems to have all the info - never falters and can recall minute details on the spot.

[percy]

Are you watching the ASX CEO Connect chat?
Jeff is great representative of HGH, he speaks well and seems to have all the info - never falters and can recall minute details on the spot.

No not today,however I have attended and watched previous presentations.However I did read the presentation.
When HGH was formed I went to all the meetings.
He is an excellent presenter

[X-men]

2 days till FY2023..NPAT confirmed $109-114...

Business as usual.... recently bought back my holding. Doom and gloom are passed ..me reconk!

[kiora]

Seems like this has effected this sector a bit lately,related?

"Of these other expenses TSB says in its general disclosure statement; "The Bank has been undertaking a regulatory review of its products and services. Provisions have been recognised where this review has identified areas that may result in financial loss and the costs can be reasonably estimated. The information usually required under NZ IAS 37 is not disclosed on the grounds it could impact the position of the Bank.""

https://www.interest.co.nz/banking/122713/tsb-chief-donna-cooper-departing-role-less-week-after-bank-reported-48-drop-profits?

"In recent years MAS has undertaken a fulsome review of our insurance services as part of our Conduct and Culture programme. This included proactively seeking out and investigating potential issues. As a result, we identified several errors resulting from manual systems, processes, and controls that impacted Members and self-reported these to the Financial Markets Authority (FMA)."

https://www.mas.co.nz/about-mas/news/update-fma-action-regarding-mas/

Self reported & remediated then FMA comes in with big stick???

WTF have they got nothing better to do?

[Fortunecookie]

Seems like this has effected this sector a bit lately,related?

"Of these other expenses TSB says in its general disclosure statement; "The Bank has been undertaking a regulatory review of its products and services. Provisions have been recognised where this review has identified areas that may result in financial loss and the costs can be reasonably estimated. The information usually required under NZ IAS 37 is not disclosed on the grounds it could impact the position of the Bank.""

https://www.interest.co.nz/banking/122713/tsb-chief-donna-cooper-departing-role-less-week-after-bank-reported-48-drop-profits?

"In recent years MAS has undertaken a fulsome review of our insurance services as part of our Conduct and Culture programme. This included proactively seeking out and investigating potential issues. As a result, we identified several errors resulting from manual systems, processes, and controls that impacted Members and self-reported these to the Financial Markets Authority (FMA)."

https://www.mas.co.nz/about-mas/news/update-fma-action-regarding-mas/

Self reported & remediated then FMA comes in with big stick???

WTF have they got nothing better to do?

With regards to TSB, I get the feeling the provision is for a CCCFA breach. I did see a headline that they are restructuring. Unfortunate for the workers involved but I am surprised they didn't focus on a digital strategy.

[X-men]

US banks passed the test....crisis end now???

[justakiwi]

OK, this is really weird. I use the Heartland app for 99% of my Heartland related banking. Very rarely have to log in to internet banking. It has been working fine until just now. I tried to log in and got a message saying my login details were incorrect. I knew I had entered them correctly, but in case I was having a blonde moment, I double checked and tried again. No luck. Tried logging in via internet banking instead (on my computer) and am now locked out of my account.

What is even weirder, is that the same thing has happened today with my Rabobank app and internet banking. Again, I have doubled checked that I am using the correct log in details, and I am. And yes, I checked that caps lock wasn't on.

Does anyone here use either of these apps - if so, could you please check that you can log in for me?

Thanks!

P.S. Neither bank has 24/7 support, so I can't do anything until tomorrow.

[BDL]

I have tried several times today to log into the Heartland app and on PC with no luck.

Just does nothing....

[777]

Just used my Heartland app and it works fine as does the internet access but the internet access wasn't working earlier. I would suggest trying again.

[justakiwi]

Interesting. Thanks!

I just managed to get into Rabo, but Heartland is still saying I'm locked out.


I have tried several times today to log into the Heartland app and on PC with no luck.

Just does nothing....

[justakiwi]

Interesting. Thanks!


I have tried several times today to log into the Heartland app and on PC with no luck.

Just does nothing....


Just used my Heartland app and it works fine as does the internet access but the internet access wasn't working earlier. I would suggest trying again.

[Grimy]

I have just tried on both PC and phone with no issue.
But about 3 days back I couldn't get in (on my phone)-and I know I had the password right.

[Bjauck]

Interesting. Thanks!

I just managed to get into Rabo, but Heartland is still saying I'm locked out.
Heartland digital and Heartland app were both working ok for me just now.

[Cabinet]

I have just logged into Heartland with no problems at all. I do not have the Rabo App but logged in on laptop also without issue.

[justakiwi]

Couldn't get through earlier this morning, so requested a call back. They have just phoned and unlocked my account. She confirmed that yes, they were having issues over the weekend, but everything is now resolved.

[Joshuatree]

How's everyone finding the website these days,has it improved doing your transactions?People used to find it slow and clunky compared with the big banks.
Disclose I'm a shareholder only atp.

[justakiwi]

I rarely use the website for internet banking. I do all my banking via apps. The only time I ever have to do it via IB is if I want to close an account. For some strange reason most banks don't give you the ability to do this yourself.


How's everyone finding the website these days,has it improved doing your transactions?People used to find it slow and clunky compared with the big banks.
Disclose I'm a shareholder only atp.

[Bjauck]

How's everyone finding the website these days,has it improved doing your transactions?People used to find it slow and clunky compared with the big banks.
Disclose I'm a shareholder only atp.
Website is much faster and more sleek than it used to be. The old site used to open up far too many new windows. App is also fast and reliable in my experience.

[X-men]

Been a while...back to $1.80...cap raising sp

[alokdhir]

Before W69 says ...I say so ...$2 by Xmas ....hopefully this time it will be as times are changing :t_up:

[winner69]

Before W69 says ...I say so ...$2 by Xmas ....hopefully this time it will be as times are changing :t_up:

The world is a happy place (at least for share punters) these days so $2 well before Xmas ……..probably just after result announcement next month when Jeff say $125m plus profit for F24

[Simsee]

The world is a happy place (at least for share punters) these days so $2 well before Xmas ……..probably just after result announcement next month when Jeff say $125m plus profit for F24

I recall the prophets of doom predicted sun $1.50 not long ago. I also promised to back the b-train up for more if that happened. The b- train is back in the shed, Jeff continues his run and in Vietnam the sun is shining. All is well

[winner69]

I recall the prophets of doom predicted sun $1.50 not long ago. I also promised to back the b-train up for more if that happened. The b- train is back in the shed, Jeff continues his run and in Vietnam the sun is shining. All is well

You on to it mate, That’s why one needs to keep track of how happy the sharemarket punters are at any one time.

Hope they stay happy for a few months

[percy]

You on to it mate, That’s why one needs to keep track of how happy the sharemarket punters are at any one time.

Hope they stay happy for a few months

I tried to buy some more for the wife at $1.67.Only managed a handfull.Then tried at $1.70 and got none.Then gave up.
However, happy as our HGH holdings are enjoying the current up trend.
Switched the wife's order to Unlisted and got her a few SFF at $1.48.

[X-men]

Well done Percy!! U done well! Bought back my holding after 2 years off the register

[alokdhir]

If I recall right ...I said $ 1.53 possible when I exited my all position during CR and it did reach $ 1.50 ...its low in this cycle ...I am not sure many mentioned sub $1.50 ...but even if they did ...$1.50 is good enough ...so calls were right of W69 like always ...:t_up:

[X-men]

Ehm..it doesn't hold on $1.80

Looks like it is going down to $1.70 before going up again

[X-men]

SP is testing $1.80....

[Simsee]

SP is testing $1.80....
$1.85 by mid august then….

[iceman]

$1.85 by mid august then….

More importantly, Jeff keeps doing what he says he will do and the business just moves along nicely

[Cricketfan]

Website is much faster and more sleek than it used to be. The old site used to open up far too many new windows. App is also fast and reliable in my experience.

I'm a fairly new customer (been a shareholder for years though), and I'm shocked at how dated the website is. Feels like something from the early 2000's. Only reason I logged on was because I wanted to open a Term Fund, but it seems you can't even do that online.

[Grimy]

The term deposits I've opened with them have been on-line or through the app (can't remember which off-hand), and was very easy.

[Bjauck]

I'm a fairly new customer (been a shareholder for years though), and I'm shocked at how dated the website is. Feels like something from the early 2000's. Only reason I logged on was because I wanted to open a Term Fund, but it seems you can't even do that online.
The website is a lot better and smoother than it used to be!

I too have a term pie fund and it was a rigmarole to open it. Unlike my big Aussie Bank which has an online facility to do that, I ended up in email correspondence with several Heartland employees. I only persevered with the process because I am shareholder.

The Heartland Bank pie funds are actually held by NZ Guardian Trustees so could explain the different procedures compared with Heartland Bank Term Deposits. Maybe they will introduce an online process eventually.

[Cricketfan]

The website is a lot better than it used to be!

Huh, it seems there are two versions of their internet banking! https://secure.heartland.co.nz/ and https://digital.heartland.co.nz/. Yesterday I had logged onto the former, which must be their old version. The latter is a lot more like the app and seems more modern-looking, though still no option to open a Term PIE.

[justakiwi]

“You can open a YouChoose, Notice Saver, or Direct Call Account, online or by downloading the Heartland Mobile App (https://www.heartland.co.nz/mobile-app).”

So these are apparently the only accounts you can open online.


Huh, it seems there are two versions of their internet banking! https://secure.heartland.co.nz/ and https://digital.heartland.co.nz/. Yesterday I had logged onto the former, which must be their old version. The latter is a lot more like the app and seems more modern-looking, though still no option to open a Term PIE.

[Bjauck]

“You can open a YouChoose, Notice Saver, or Direct Call Account, online or by downloading the Heartland Mobile App (https://www.heartland.co.nz/mobile-app).”

So these are apparently the only accounts you can open online.


On the Heartland Digital site you can open online those three types plus also term deposits. However none of the PIE funds can be opened online on the Digital site.

[777]

Good question to raise at next AGM.

[winner69]

Hope Jeff not going to ‘disappoint’ with results ……..as dairy prices collapsing usually not a good sign for HGH share price in next few months

[Snoopy]

Hope Jeff not going to ‘disappoint’ with results ……..as dairy prices collapsing usually not a good sign for HGH share price in next few months



Jeff is a smart guy and will be all over this, I wouldn't be surprised if he is organizing milk shakes for the AGM, instead of the traditional finger food and alcoholic tipple. That is the kind of thinking needed to turn around the milk price!

SNOOPY

[winner69]

ASB had a good year ….higher profits and increased NIM

All on track for HGH to achieve upper end or maybe slightly above guidance

Only a week or so to find out

[thegreatestben]

HGH has been the gift that keeps on giving for me, let's hope that continues. Has been a lot of things happening through out the year!

[Rawz]

steady as she goes. within target. nothing to see here. spend time looking at other bets

Just my opinion

[iceman]

HGH has been the gift that keeps on giving for me, let's hope that continues. Has been a lot of things happening through out the year!

Same. Since BSH and all the tickers in between. Been ups and downs but always a happy holder. There have been "lots of things happening through the year" every single year. Happy holder onwards and upwards

[ziggy415]

steady as she goes. within target. nothing to see here. spend time looking at other bets

Just my opinion
Hope to see some upward momentum from stockco and challenger bank would be nice

[Rawz]

buy when it get close to book value and put it back in the bottom drawer

[X-men]

What is the current book value?

[SCOTTY]

what is the current book value?

nta = $1.09 (nzx)

[winner69]

What is the current book value?

At Dec 2022 Book Value was $1.019. On current number of shares it is $1.44

Probably a few cents higher now

[thegreatestben]

How many here take the DRP? I'm basic and use sharesies so I can't. Have pondered whether I would take DRP or not if I could, I usually reinvest within a few days of receiving the div.

[Gerald]

nta = $1.09 (nzx)

$1.12 nta at half year ((1015-223)/705)

$1.44 BV at half year (1015/705)

NZX/yahoo figures are always dodgy

[winner69]

$1.19 nta at half year ((1015-223)/666)

$1.53 BV at half year (1015/666)

NZX/yahoo figures are always dodgy

Number of shares increased …so has Book Value

Let’s split your $1.53 and my $1.44 and call it $1.50 until we know the real answer soon

[justakiwi]

I would take DRP if I could, but I am also with Sharesies unfortunately. I've given up hope of them ever providing DRP for other companies - Contact Energy is still the only one they support, which is beyond ridiculous. I am sucking it up until I've built up a large enough holding to justify the $15 transfer out fee.


How many here take the DRP? I'm basic and use sharesies so I can't. Have pondered whether I would take DRP or not if I could, I usually reinvest within a few days of receiving the div.

[silu]

How many here take the DRP? I'm basic and use sharesies so I can't. Have pondered whether I would take DRP or not if I could, I usually reinvest within a few days of receiving the div.

I'm not a big investor so when available I always choose DRP

[RTM]

How many here take the DRP? I'm basic and use sharesies so I can't. Have pondered whether I would take DRP or not if I could, I usually reinvest within a few days of receiving the div.

I used to take it however got sick of the price dropping below the DRP and I now take the money. And decide when and if I want to top up at any point in time.

[percy]

I take the cash with NZ shares and DRP with Aussie shares.[saves banking issues].

[Grimy]

Same here RTM.

[iceman]

How many here take the DRP? I'm basic and use sharesies so I can't. Have pondered whether I would take DRP or not if I could, I usually reinvest within a few days of receiving the div.
I have been signed up to the DRP for ages. Good and hassle free way of growing the portfolio. Don’t worry about fluctuations in SP too much on good steady long term performers like HGH

[thegreatestben]

Sounds like I'm not missing out! thanks to all who responded. I've been modelling out some fairly modest predictions of holding these and reinvesting dividends until I'm 65. Future me should be pretty happy with present day me.

[winner69]

Jeff better print a great result to keep the share price up

Media reports Global dairy prices are expected to take another “significant decline” overnight, New Zealand stock exchange analysts say.

If so indicates a lower HGH share price in a few months time

[Simsee]

Jeff better print a great result to keep the share price up

Media reports Global dairy prices are expected to take another “significant decline” overnight, New Zealand stock exchange analysts say.

If so indicates a lower HGH share price in a few months time
Jeff’s got this. Have faith.

[ziggy415]

Jeff’s got this. Have faith.
Malaysia and Indonesia ban all live cattle from Australia because of lumpy skin disease, Malaysia usually buys 20,000 animals per year but only 2300 so far this year, may effect stockco income with loans provided to farmers for this market
Hope Jeff's got this

[Gerald]

Probably due another cap raise to keep the old business model afloat sooner or later eh?

https://bankdashboard.rbnz.govt.nz/summary

The above would seem to say in the last Q HGH has the lowest capital ratio of all NZ banks, has non-performing loans 700% higher then the big banks and for all that risk has a middle of the park return on assets. And to top it off not long back punters were paying 2x tangible book.

Got to have something wrong...Always so much enthusiasm here :t_up: Will have to go back to the old model and fix up my numbers.

[Muse]

Probably due another cap raise to keep the old business model afloat sooner or later eh?

https://bankdashboard.rbnz.govt.nz/summary

The above would seem to say in the last Q HGH has the lowest capital ratio of all NZ banks, has non-performing loans 700% higher then the big banks and for all that risk has a middle of the park return on assets. And to top it off not long back punters were paying 2x tangible book.

Got to have something wrong...Always so much enthusiasm here :t_up: Will have to go back to the old model and fix up my numbers.

Nice work looking at the RBNZ dashboard - it always amazes me that punters & investors don't look at it more often...heartland bank's NZ book and NPAT for the 3rd quarter have been publicly available for months now and mums been the word on sharetrader.

Regarding your comments.

Probably due a capital raising if/when/ever HGH is allowed to make it's aussie acquisition. The 31 March 2023 capital adequacy figures for HGH you refer to relative to its peers are 1) well above the stat minimum 2) disproportionately impacted by the payment of a dividend by HGH only 9 days earlier 3) doesn't include the $100m of capital raised in April 2023. Notwithstanding that is core funding ratio of 90.2% is better than the big 4 average of 89.7%. HGH's return on assets much better than the big 4. It's liquidity ratio better than the big 4, as is its credit concentration.

Non performing loans is the one to watch. HGL has long had far higher non performing loans than its peers, hence the NIM. It has only crept up 100bps since December 2022, and circa 280bps above its trailing 5 quarter average. In the 1H conference call, mgmt attributed that to the business and motor portfolios where the exposures have strong security and longer term remediation plans in place. Unsurprisingly individual provisions are up from a year ago, while collective provisions are down while p2p lending via harmoney runs off.

I've reviewed all the broker reports available on HGH and only one provides detail on where the growth in NPAT is due to come from - and nearly all of that that comes from stockco (AU). RBNZ data only shows P&L's for the NZ bank (HBL). Statutory NPAT for March quarter of $17.6m was down $19.3m achieved in March 2022. However, from an underlying point of view, HBL looks to have booked a $2.8m loss on the designation of swaps from the prior period, so net net not much change, and year end will include another designation loss plus whatever the loss on HMY is. So it really does come down to stockco. While w69 likes to get his jollies from the milk price, if you really wanted to know if HGH will meet its guidance, you have to take a view on the australian rural sector, and how that has changed in the 6 months just been versus a year earlier. Not just in a price sense, but in a rebuilding of the herd sense.

Many months ago I said my best case was the business hits the low end of its underlying guidance, and wouldn't be surprised if it came in below it. Since then Jeff has given a few interviews where he talked to the previously issued guidance (albeit if I recall correctly he also signalled in one interview the low end range) so I would think it would be a poor look for him to have said that and only a couple months later come in below that.

Disc. last bought in march 2023 at $1.56.

[Muse]

Hey FM, it will be interesting if HBL can continue this trend in current banking industry climate

Rawz I did this months ago but couldn't be bothered posting till now

the answer it seems is yes - heartland bank even in the peak of the confidence crisis back in march did continue to outperform its peers in raising deposits. Some of that will be getting out early w/ rates, but more to do with the explanations Jeff gave in the excellent podcast JaK posted a few months ago.

*some* seasonality in deposit levels but as a whole banking deposits fell in the March quarter. Big 4 bank deposits fell 1.4%, total banking system fell 1.1%. Heartland's deposits only fell 0.4%. So continued system outperformance in raising deposits.

14713

[Muse]

Reporting full yr results now on the 29th, not the 24th. But release signals no change to guidance of underlying npat of $109-114m, so that's good news.
https://www.nzx.com/announcements/416654

[winner69]

Reporting full yr results now on the 29th, not the 24th. But release signals no change to guidance of underlying npat of $109-114m, so that's good news.
https://www.nzx.com/announcements/416654

‘Discussions’ with auditors re fair value adjustments ongoing?

Doesn’t matter what outcome is because they don’t count eh

must have been talking to Fletchers re abnormals / significant items

[Muse]

Be some losses on the de-designation swaps from FY22, M&A expenses on the AU acquisition, and negative revaluation of the HMY shareholding held below operating earnings, I would have thought.
Punters free to decide what ones are valid and what ones aren't.

[percy]

Be some losses on the de-designation swaps from FY22, M&A expenses on the AU acquisition, and negative revaluation of the HMY shareholding held below operating earnings, I would have thought.
Punters free to decide what ones are valid and what ones aren't.

The BIG one for me is whether the divie will be 5.5 cps or 6 cps.
The rest is just noise....lol.

[Rawz]

The big one for me is book value.

book value x0.90 = buy
book value x1.20 = fair value
book value x1.50 = sell

[winner69]

The BIG one for me is whether the divie will be 5.5 cps or 6 cps.
The rest is just noise....lol.

Surely 6 cents …maybe more

If 5.5 cents no pay rise in 3 years ……that’s pretty poor treatment of shareholders

[winner69]

The big one for me is book value.

book value x0.90 = buy
book value x1.20 = fair value
book value x1.50 = sell

I think you’ll be spot on with your fair value …..so put the spare cash into cheap cars or something

[X-men]

What is the current book value? X 1.09?

[Simsee]

What is the current book value? X 1.09?
Any guesses as to tomorrow’s announcement?

[thegreatestben]

HGH: Heartland's FY2023 result demonstrates resilience

NZX/ASX release
29 August 2023

Heartland's FY2023 result demonstrates resilience

Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) is pleased to
announce a net profit after tax (NPAT) of $95.9 million for the financial
year ended 30 June 2023 (FY2023). On an underlying basis, FY2023 NPAT was
$110.2 million. NPAT increased $0.7 million (0.8%), and on an underlying
basis, $14.1 million (14.6%), compared with the financial year ended 30 June
2022 (FY2022).

Highlights for FY2023

Financial highlights
- NPAT of $95.9 million, up 0.8% ($0.7 million) on FY2022 NPAT. Underlying
NPAT of $110.2 million, up 14.6% ($14.1 million) on FY2022 underlying NPAT.
- One-off or non-cash technical items had a $14.3 million net impact on NPAT.

- Gross finance receivables (Receivables) of $6.8 billion, up 10.1% ($625.5
million).
- Underlying return on equity (ROE) of 11.9%, down 68 basis points (bps).
- Net interest margin (NIM) of 3.97%, down 8 bps. Underlying NIM of 4.00%,
down 16 bps.
- Net interest income (NII) of $282.0 million, up 12.7%. Underlying NII of
$283.9 million, up 14.3%.
- Underlying cost to income (CTI) ratio of 42.0%, down 53 bps on FY2022.
- Underlying impairment expense ratio of 0.36%, up 7 bps.
- FY2023 final dividend of 6.0 cents per share (cps), resulting in a FY2023
total dividend of 11.5 cps, up 0.5 cps on the FY2022 total dividend.
- Earnings per share (EPS) of 14.0 cps, down 2.1 cps. Underlying EPS of 16.0
cps, down 0.3 cps.

Strategic highlights
- $199 million raised through 2022 equity raise to fund growth ambitions for
existing businesses and repay acquisition-related bridge debt of $174 million
(A$158 million).
- Completed the integration of StockCo Australia into Heartland.
- Signed a conditional share purchase agreement for the purchase of
Challenger Bank Limited (Challenger Bank) on 20 October 2022, subject to
obtaining the requisite regulatory approvals.
- Australian Reverse Mortgages business increased market share to 38.4%.
- Heartland Bank Limited (Heartland Bank) awarded Canstar New Zealand's Bank
of the Year - Savings award for the sixth consecutive year.
- Nearing completion of the upgrade of Heartland Bank's core banking system.

[Sideshow Bob]

Deleted...

[Sideshow Bob]

Duplicate post....

[Rawz]

those darn technical items lol

[percy]

The 6 cents per share fully imputed divie is most welcome

[RTM]

The 6 cents per share fully imputed divie is most welcome

Well that was an early announcement for Heartland. Usually its later in the day.
And yes....most welcome Percy.

[ronaldson]

The 6 cents per share fully imputed divie is most welcome

Yes, and fully imputed (to 28%) and with a DRIP opportunity also.

[winner69]

Adjusted NPAT within guidance as expected and F24 guidance is for a little more

Seems Jeff is trying to bamboozle us with accounting jiggery pokery

The footnotes are about as long as the body of the report

Whatever we have to keep trusting Jeff eh

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/417247/401666.pdf

[winner69]

The number of abnormal / one offs / adjustments getting as bad as Fletchers efforts …though not on same scale

Bit of a shame really as for years accounts etc were always so clean

[Rawz]

The number of abnormal / one offs / adjustments getting as bad as Fletchers efforts …though not on same scale

Bit of a shame really as for years accounts etc were always so clean

Is it fair or is it alarm bells time?

one thing that is different is more activities across the ditch, which does come with one offs

[thegreatestben]

W69 I'd read that as the outside world influence rather than anything else. Result about as I expected, guidance for next FY steady as she goes.
Looking to 2025 and onward for my portfolio incl hgh.

[winner69]

Is it fair or is it alarm bells time?

one thing that is different is more activities across the ditch, which does come with one offs

Not alarm bells yet rawz

But my confidence / admiration / faith in Jeff is waning

But he did say they going to double profits in next 5 years

So 110m to 220m …. Suppose getting to say 120m in 2024 is a small step on the way …but will have to do a lot better than for the following 4 years

[bull....]

as i said last report nim's under pressure , but not surprising all bank type stocks under pressure on nim's

[winner69]

Rawz ….Book Value is $1.45 ……up a bit from $1.36 last year

New capital was $201m and Retained Earnings etc increased by $21m

[Snow Leopard]

Not alarm bells yet rawz

But my confidence / admiration / faith in Jeff is waning

But he did say they going to double profits in next 5 years

So 110m to 220m …. Suppose getting to say 120m in 2024 is a small step on the way …but will have to do a lot better than for the following 4 years

Heartland probably reaching an inflection point but Jeff not using that phrase because OCA has abused it so much.

[Rawz]

Rawz ….Book Value is $1.45 ……up a bit from $1.36 last year

New capital was $201m and Retained Earnings etc increased by $21m

Priced about right. If I held I would take the DRP

Half year will be interesting

[BlackPeter]

Not alarm bells yet rawz

But my confidence / admiration / faith in Jeff is waning

But he did say they going to double profits in next 5 years

So 110m to 220m …. Suppose getting to say 120m in 2024 is a small step on the way …but will have to do a lot better than for the following 4 years

Yeah, I noticed this "doubling of the profits in 5 years" as well - Jeff clearly seems to be much more optimistic than the usual analysts. Jeesh - this would be a CAGR of 15%!

Just to compare:

HGH's backwards earnings CAGR (10 years) is 8.3%. Hmm - is he really going to double that?

Analysts predicted a forward earnings CAGR (3 years) of 4.7% - they better go back to their drawing boards, can't have analysts being less optimistic than Jeff, can we?

But then - I noticed he was talking just about an "ambition" to double the earnings (not a forecast), wasn't he? and even better - wasn't this doubling meant for the underlying earnings?

Looks like Jeff has left himself plenty of escape routes to keep satisfying his ambition ...

[percy]

Yeah, I noticed this "doubling of the profits in 5 years" as well - Jeff clearly seems to be much more optimistic than the usual analysts. Jeesh - this would be a CAGR of 15%!

Just to compare:

HGH's backwards earnings CAGR (10 years) is 8.3%. Hmm - is he really going to double that?

Analysts predicted a forward earnings CAGR (3 years) of 4.7% - they better go back to their drawing boards, can't have analysts being less optimistic than Jeff, can we?

But then - I noticed he was talking just about an "ambition" to double the earnings (not a forecast), wasn't he? and even better - wasn't this doubling meant for the underlying earnings?

Looks like Jeff has left himself plenty of escape routes to keep satisfying his ambition ...

I well remember when HGH's ROE was 3% and Jeff stated he wanted to triple it .
Sounded like pie in the sky at the time.
Well he delivered.
Has a history of doing what he said he would do.

[winner69]

Shame the media don’t understand underlying / normalisation / jigggery pokery …unlike punters

Heartland profit stalls as margins shrink, lending slows

https://www.rnz.co.nz/news/business/496811/heartland-profit-stalls-as-margins-shrink-lending-slows?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+3 0+August+2023

[mike2020]

Shame the media don’t understand underlying / normalisation / jigggery pokery …unlike punters

Heartland profit stalls as margins shrink, lending slows

https://www.rnz.co.nz/news/business/496811/heartland-profit-stalls-as-margins-shrink-lending-slows?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+3 0+August+2023

"In this environment, Heartland's asset quality has performed within expectations. Heartland has worked hard to support its customers, particularly those facing temporary difficulties due to the current economic environment," the company said in a presentation.

Going for the tittle 'Least hated bank" maybe?

[winner69]

"In this environment, Heartland's asset quality has performed within expectations. Heartland has worked hard to support its customers, particularly those facing temporary difficulties due to the current economic environment," the company said in a presentation.

Going for the tittle 'Least hated bank" maybe?

I note they were a lender to the now defunct Wishbone. ….some outfits need more than just support from their banks eh

[Ggcc]

Shame the media don’t understand underlying / normalisation / jigggery pokery …unlike punters

Heartland profit stalls as margins shrink, lending slows

https://www.rnz.co.nz/news/business/496811/heartland-profit-stalls-as-margins-shrink-lending-slows?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+3 0+August+2023
It’s a difference from the media indicating banks are ripping kiwis off with excessive profits

[Snoopy]

"In this environment, Heartland's asset quality has performed within expectations. Heartland has worked hard to support its customers, particularly those facing temporary difficulties due to the current economic environment," the company said in a presentation.

Going for the tittle 'Least hated bank" maybe?


I well remember when HGH's ROE was 3% and Jeff stated he wanted to triple it .
Sounded like pie in the sky at the time.
Well he delivered.
Has a history of doing what he said he would do.



I note they were a lender to the now defunct Wishbone. ….some outfits need more than just support from their banks eh


Some of you guys are making this shareholder squirm a bit. Only Percy is sticking to the faith.

I am sure I remember my old dad telling me when I was just a pup that if you take a chicken wishbone, then dry it out, make a wish then 'break the bone' with a friend (with each of you holding one end), then whoever keeps hold of the apex of the bone when it snaps - then their wish will come true. Provided that is, you do not tell anyone what your individual wish was until after the exercise is over.

If Wishbone is now defunct, this puts a dent in that legend. Actually I did read that Saturday Post article from a couple of weeks back. It said Wishbone wasn't dead, - just 'resting' under a receivership blanket. Waiting for a white knight to give her a kiss and wake her up again. Well I still believe in dreams. And with Jeff as the fairy godfather, how can this not come true?

It is true I did jest as the milk price fell of a cliff that Jeff would be onto it, and would serve up milk shakes at the AGM, in solidarity with his sharemilker customers. But now some of you seem to be suggesting that Jeff will be serving up pork pies as well. Really? I mean this is Jeff we are talking about here. The last time I quizzed him about risk he had that broad contemplative smile and said 'everything was in harmoney' or words to that effect. My advice to shareholders is to take their own sandwiches to the AGM. Don't rely on being served a pork pie!

SNOOPY

[mike2020]

Some of you guys are making this shareholder squirm a bit. Only Percy is sticking to the faith.

I am sure I remember my old dad telling me when I was just a pup that if you take a chicken wishbone, then dry it out, make a wish then 'break the bone' with a friend (with each of you holding one end), then whoever keeps hold of the apex of the bone when it snaps - then their wish will come true. Provided that is, you do not tell anyone what your individual wish was until after the exercise is over.

If Wishbone is now defunct, this puts a dent in that legend. Actually I did read that Saturday Post article from a couple of weeks back. It said Wishbone wasn't dead, - just 'resting' under a receivership blanket. Waiting for a white knight to give her a kiss and wake her up again. Well I still believe in dreams. And with Jeff as the fairy godfather, how can this not come true?

It is true I did jest as the milk price fell of a cliff that Jeff would be onto it, and would serve up milk shakes at the AGM, in solidarity with his sharemilker customers. But now some of you seem to be suggesting that Jeff will be serving up pork pies as well. Really? I mean this is Jeff we are talking about here. The last time I quizzed him about risk he had that broad contemplative smile and said 'everything was in harmoney' or words to that effect. My advice to shareholders is to take their own sandwiches to the AGM. Don't rely on being served a pork pie!

SNOOPY

I don't see pork pies, I just see good press. People are tired of the banks creaming it. Heartland is working with the people.

[DavidB]

Shame the media don’t understand underlying / normalisation / jigggery pokery …unlike punters

Heartland profit stalls as margins shrink, lending slows

https://www.rnz.co.nz/news/business/496811/heartland-profit-stalls-as-margins-shrink-lending-slows?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+3 0+August+2023


Interesting to contrast RNZ's article with the Business Desk's article on the same topic.

Heartland focused on securing Australian licence

Heartland Group Holdings is focused on securing its Australian licence to be an authorised deposit-taking institution as it draws tantalising close to the $100 million profitability mark.

So who sets the correct tone about Heartland and what the future for it will be?? RNZ or Business Desk? A general news media site or the specialist business media one?

By the way, isn't RNZ known to be somewhat more Left than Chairman Mao? I don't know as I never access it.


https://businessdesk.co.nz/article/finance/heartland-focused-on-securing-australian-licence





The article may be behind their paywall.

[thegreatestben]

C'mon now snoops, Percy isn't the only one keeping positive - I wouldn't call it faith as we are well informed. I am pleased with the result, Jeff and his team have done well considering their ambitions remain high and the markets are challenging!

[percy]

Craigs like HGH too,moving them to "overweight".
They see the dividend raising to 12 cps in 2024.,....12.5cps in 2025 and ,.......13.2 cps in 2026.

[Recaster]

FY23 was the year that the reality of writing reverse mortgages hit operating cash flow severely.

So-called 'changes in operating assets and liabilities' puts them back into positive. A nice banking accounting trick.

But compare net operating cash flow before changes in operating assets and liabilities to FY22 and the pressure the reverse mortgage business is putting on the company is obvious.

Luckily, they got a share issue away for $193m.

[winner69]

For those interested NTA at June was $1.09 per share …… was $1.16 two years ago

Just as well market doesn’t use NTA as a valuation metric

[Snow Leopard]

FY23 was the year that the reality of writing reverse mortgages hit operating cash flow severely.

So-called 'changes in operating assets and liabilities' puts them back into positive. A nice banking accounting trick.

But compare net operating cash flow before changes in operating assets and liabilities to FY22 and the pressure the reverse mortgage business is putting on the company is obvious.

Luckily, they got a share issue away for $193m.

You [still] have a very poor understanding of the Heartland accounts.

Try and clear your mind of your prejudices, read them again and maybe you will see the light.
:)

[Snow Leopard]

For those interested NTA at June was $1.09 per share …… was $1.16 two years ago

Just as well market doesn’t use NTA as a valuation metric

The joys of buying StockCo :mellow:

[Snow Leopard]

The most worrying aspect of the Heartland Results comes when I hover my mouse over the front page of the presentation and I get a little pop-up as below.

14732

Maybe an AI thing?

[winner69]

The most worrying aspect of the Heartland Results comes when I hover my mouse over the front page of the presentation and I get a little pop-up as below.

14732

Maybe an AI thing?

Spooky

Might hover the mouse over that photo of Jeff and see what secrets come out

[Jay]

Jeff is apparently, "a person in a suit" and Andrew is "a person in a white shirt"

[justakiwi]

That pop up could be an accessibility feature. Was there a photo or illustration on that page?Sometimes they add these on websites and they are read out loud by the software for people who are blind or have impaired vision. Generally used to describe what is in photos or other graphics.


The most worrying aspect of the Heartland Results comes when I hover my mouse over the front page of the presentation and I get a little pop-up as below.

14732

Maybe an AI thing?

[thebusinessman]

That pop up could be an accessibility feature. Was there a photo or illustration on that page?Sometimes they add these on websites and they are read out loud by the software for people who are blind or have impaired vision. Generally used to describe what is in photos or other graphics.

JAK's onto it. A computer looks at the image to try and figure out what it is for screenreaders etc, hence the disclaimer so that your local blind shareholder knows it's not an official caption. Picture is blue, like ocean, some white circular "trails" made by "fish". A pretty good guess really.

[Muse]

As a suite of things (the final dividend, aspects of the 2H FY23 result, FY24 guidance, and 5 year ambition on cost to income and NPAT growth aspirations) I'm pretty content where Heartland sits and where it's heading. As always you take the good w/ the average and bad, which I'll come back to.

THE GOOD
** Was pleased with the final dividend - it was a line call between 5.5 and 6cps.

** Outstanding growth (+20%) in reverse mortgages and 4.5% growth in non RM receivables on FY22.

** Continued leadership position in raising deposits relative to the rest of the wider NZ banking industry (must try better next time Winner69). 2H result showed no NIM compression despite 1) ongoing lift in deposit and wholesale funding rates; 2) subnote issue in the 2H which was probably 50bps more expensive than had it gotten away before March; and 3) growing proportion towards higher quality & lower NIM earning receivables impacting on mix. I reckon some of the key business units - particularly RMs - saw NIM increase in the 2H relative to the first half when rates spiked quickly and HGH were unwilling or unable to pass it on to its variable rate customers. Outlook on NIM is reasonably stable w/ minor mix influences.

** I keep a detailed credit risk index on the detail and mix of its receivables and it continues to improve in quality

** FY24 guidance at the midpoint implies $119m in underlying earnings or up 8.2% (note underlying EPS may not grow to the same extent given dilution from DRP - new shares issued under the DRP from FY18-FY23 has averaged 7.23m pa...last 2yr ave is 5.7m).

** Consensus amongst the 3 main brokers that cover HGH provide for FY24-FY26 uEPS of 16.4, 17.9, & 19.2. Consensus is about $1m below the midpoint of FY24 guidance. Consensus DPS for the next 3yrs of 12.17, 13.17, 14.07 - all 100% imputed (gross yield for a 33% taxpayer at the 179 close price of 9.44%, 10.2%, 10.9%).

** Continued reduction in cost to income (CTI) with a goal to reducing it to 35%. If achievable, that will play a large part in stabilising and growing ROE over the long term and growing NPAT and dividends. Management and the market would be better to think of overheads as costs to NIM, not income.

** Aspirations to double uNPAT in 5 years. Delighted to have management thinking big - if its achievable or not I don't know but I suspect if it is - a large part of that will come from the Challenger acquisition and growth capital that will be required (more later)

THE AVERAGE
** Messy result. Lots of normalisations - up to investors to come to their own view. A lot to be said for clean results. None the less I can get over some/most of them. No one cried foul last year when management removed the $16.7m gain (from the de-designation of swaps from hedge accounting) from underlying NPAT so it's a bit disingenuous to cast shade on the corresponding accounting loss as that previous transaction unwinds into the P&L. For underlying / operating earnings purposes I'm content to look past M&A costs, non core revaluations on investments like harmoney, and the cost of getting the Australian banking license. The after tax amounts from all those are borne and reflected in the book value. It's the underlying / operating result that most often drives dividends so I give regard to that but come to my own view. But I also am keen that the underlying/operating result is reflective of appropriate provisioning which I discuss below.

** Non performing loans by $ and by % up on FY22 but down from the 1H FY23 result. Skeptically I wonder if that is because they took a few impairments/write offs on the chin in the 2H to clean them down from December 2022.

THE BAD
** The dynamics in the vehicle finance book are a bit bizarre to me. Growing book fast and taking marketshare but earnings going backward at a reasonable clip. Chasing growth too hard or other dynamics at play?

** StockCo continues to underwhelm me. I thought they paid too much at acquisition (a very high P/BV) and repaid the bridging loan used to finance it by undertaking a placement and rights issue which had the net effect of reducing NTA/shr and diluting EPS. Book up something like 2% which really doesn't jibe with the excitement at the time of acquisition. Australian stock numbers are up but from a confluence of factors price and slaughter capacity to process them are down - detail on page 34 of the investment presentation. Hopefully flock numbers and prices revert to mean overtime.

** From a credit impairment perspective (but actual write offs and increased provisions) it was a year of two halves - 1H was outstanding, 2H things caught up and then some. While I think the impairment expenses are about to or below what one would in good faith expect at this point in the cycle there were two things that caught my attention. Management used $5.6m of the $8m economic overlay in FY23. I don't begrudge management for that as provisions are there to be either used or released but I would have thought there would have been a modest top up in the provision.

* The second issue that has my attention is on the provisioning as a % of gross receivables. HGH increased its expected aggregate credit loss provision by $1.3m in FY23 to $53.3m, over gross (pre provision) receivables of $6.8bn. Given the credit worthiness of the RM & mortgage books the best way IMO to look at provisioning is to look at the ECL provision as a % of the total gross book less RMs and home loans (in fact, the ECL entirely relates to the non RM/HL book). Provisioning as a % of those receivables actually shrank from 1H FY23 of 1.35% to 1.31% at the close of the FY23 financial year. Yes the my credit index shows a reduction in credit risk but at this point of the cycle I would have thought provisioning would have at least stayed the same. 4bps on a big number is about $1.1m after tax (and reinforces my view that underlying results would/did come in a touch below the low end of the guidance range for the year just been). So not a massive issue - but I suppose the issue is if management have to increase provisioning next year to account for the economic cycle and how that could impact earnings. Heartland at the conference call guided for a similar credit outcome to the year just been (I guess that means similar total credit expense). Consensus credit expense is about $25m so a tad more than FY23 and I wouldn't be surprised if it comes in a touch more than that and underlying NPAT comes in below the midpoint. and I fully expect FY24 to have messy normalisations - more de-designations as the FY22 gain unwinds, more M&A costs, hopefully reversing out a gain on the harmoney valuation, etc. But as a recent purchaser back in March and to some degree even now at the spot price I'm relaxed as the mkt pricing appears reflective of that risk.

CHALLENGER
* No guidance around this acquisition will get approval. If successful, Heartland will gain an ADI / banking license in Australia which would materially decrease its cost of funds and increase NIM.
* While the initial outlay is modest (A$36m +/- changes in book since conditional signing), I do expect a capital raising will be required to fund the acquisition, additional capital required to meet Australian prudential requirements, and growth capital to fund latent and unmet growth from a capital constrained StockCo.

I last purchased in March 2023 at $1.56 and got a bit of flack for it - seems to have been a good yield and capital appreciator so far. And while I think that remains the case even at current levels, I am cognizant there may be a further capital raising if Heartland is granted permission to acquire Challenger, and mindful of the dynamics that played out when Heartland raised capital to acquire stockco last year.

Nice to see it bounce back to the SPP price from last year. The nature of the Australasian banking market is very different to America's and HGH's position with its RM makes it unique again within NZ. That said its clearly impacted by overseas sentiment. I'd imagine there could be occasional few crises of confidence as America's regional banks aren't out of the woods yet and their commercial property portfolios could haunt them for a while yet.

Just my meandering thoughts. As always, do your own research, and come to your own views.

[iceman]

Great post FM. Thanks a lot for sharing

[percy]

Thanks FM..
I guess HGH paid too much for StockCo for the same reasons they paid too much for their REL business.Time.
Buying an established business saves years of having to build up a new business.
Same will apply for Challenger Bank.

[dabsman]

JAK's onto it. A computer looks at the image to try and figure out what it is for screenreaders etc, hence the disclaimer so that your local blind shareholder knows it's not an official caption. Picture is blue, like ocean, some white circular "trails" made by "fish". A pretty good guess really.

Yeah my signature comes up as "Pearl Necklace". Not sure what its trying to imply?

[whatsup]

Gee the readings on Business Desk today re deliquent loans both vehicle and personal loans does not make good reading, is this the tip of the iceberg of worst things to come ?

[Rawz]

Gee the readings on Business Desk today re deliquent loans both vehicle and personal loans does not make good reading, is this the tip of the iceberg of worst things to come ?

Depends on how the economy goes and the unemployment rate

[Muse]

Thanks FM..
I guess HGH paid too much for StockCo for the same reasons they paid too much for their REL business.Time.
Buying an established business saves years of having to build up a new business.
Same will apply for Challenger Bank.

Agree with your point.
They want to do something with the businesses not just run it as is so a bit of that.

One wee clarification I should make re my post last night - when I talked to my credit index and the credit risk improving I should have used more precise/less sloppy language…the mix of receivables is improving (less personal and business lending, more RMs etc), and that relative risk mix is improving. The macro environment is more risky from an overall perspective and the credit risk environment is higher than last year not withstanding the change in mix.

[thegreatestben]

Great posts FM, thank you! I cannot give you any more rep unfortunately despite deserving it.

[ronaldson]

Great posts FM, thank you! I cannot give you any more rep unfortunately despite deserving it.

I don't know how to give a rep so obviously haven't during my time as a poster.

So enlightenment please someone.

[alokdhir]

I don't know how to give a rep so obviously haven't during my time as a poster.

So enlightenment please someone.

If u press on the Star button under the post then u will get the options ...now u can try on me ...lol

[thegreatestben]

Sorry Alokdhir didn't see your post on the next page!


I don't know how to give a rep so obviously haven't during my time as a poster.

So enlightenment please someone.

If you're on a pc, in the bottom left hand corner of a post there's two small icons; a sheriff's badge and an Exclamation inside a triangle.
Click on the badge to give someone good or bad reputation, you can include some words to support your choice.

Use the other button to report a post to the admins/moderators.

[ronaldson]

Done. Very useful, thanks.

[X-men]

Dividend date coming next soon next Tuesday 5th Sep.

I dont think they would raise a capital...they just raised last year ... possible issue bonds?

[winner69]

We’ll be getting DRP shares in the 160s by looks of it

Last divie was at 164 …..maybe about this again

[BlackPeter]

We’ll be getting DRP shares in the 160s by looks of it

Last divie was at 164 …..maybe about this again

... and I thought you are going to comment on the recent dairy auctions?

it sounds like auction prices went up over night - didn't you tell us HGH follows the milk price?

Happy farmers, happy holders, happy share investors. All good :t_up: ;

[winner69]

... and I thought you are going to comment on the recent dairy auctions?

it sounds like auction prices went up over night -didn't you tell us HGH follows the milk price?

Happy farmers, happy holders, happy share investors. All good :t_up: ;

Bit of a lag Pete me ol’ mate

Currently still following recent declines in dairy prices

But if next auction positive as well (as yoy keep reminding me one reading doesn’t make a trend) HGH share be OK come November

[X-men]

What about Lana .. winner? Is she going to be ok?

[winner69]

What about Lana .. winner? Is she going to be ok?

.?????

Who this Lana … another one of my typos?

[Rawz]

HGH lending mix is well diversified.

When times are good people buy and finance cars, trucks, diggers tractors AND don't need to tap into their home equity (reverse mortgage) as much.
When times are tough like now, cars, trucks, diggers etc finance slows down but its offset by reverse mortgage lending that booms as people need to tap into their home equity to live.

[Sideshow Bob]

Virtual Investor Preso at 12pm today....

https://www.nzx.com/announcements/417769

[winner69]

Interesting piece from Jenny Ruth ….Jenny always worth a read

At least she didn’t use the phrase ‘jiggery pokery’ as she did in a piece on Westpac

https://justthebusinessjennyruth.substack.com/p/heartland-takes-aim-at-costs-but?publication_id=1827355&isFreemail=true&utm_medium=email

[iceman]

Interesting piece from Jenny Ruth ….Jenny always worth a read

At least she didn’t use the phrase ‘jiggery pokery’ as she did in a piece on Westpac

https://justthebusinessjennyruth.substack.com/p/heartland-takes-aim-at-costs-but?publication_id=1827355&isFreemail=true&utm_medium=email

One of our best business commentators and I hope investors sign up to her paid blogs to keep her going. I have.

[winner69]

One of our best business commentators and I hope investors sign up to her paid blogs to keep her going. I have.

Agree with you there Iceman ..well researched and written.

[thegreatestben]

By the end of the article I was left pondering… who can you trust?

HGH faith remains, looking forward to the 20th and many more divie’s to come.

[winner69]

El Niño here in a few weeks not good news for the economy ……and Heartland

The 3 C’s are lead indicators of where economy going …….Climate, commodities and currency ….at the moment the outlook for 2 of these is not that good……probably make our current non-recession become a real one early next year

Don’t forget Jeff keeps reminding us that Heartlands fortunes are dependent on how economy going ….and Jeff old enough to remember how bad the El Niño droughts of 1997/98 were.

[alokdhir]

El Niño here in a few weeks not good news for the economy ……and Heartland

The 3 C’s are lead indicators of where economy going …….Climate, commodities and currency ….at the moment the outlook for 2 of these is not that good……probably make our current non-recession become a real one early next year

Don’t forget Jeff keeps reminding us that Heartlands fortunes are dependent on how economy going ….and Jeff old enough to remember how bad the El Niño droughts of 1997/98 were.

People have been looking for recession for long now ...maybe stocks will actually rejoice when it truly materialises .

That shud open the path to lower rates outlook by mid 2024 ...

[BlackPeter]

El Niño here in a few weeks not good news for the economy ……and Heartland

The 3 C’s are lead indicators of where economy going …….Climate, commodities and currency ….at the moment the outlook for 2 of these is not that good……probably make our current non-recession become a real one early next year

Don’t forget Jeff keeps reminding us that Heartlands fortunes are dependent on how economy going ….and Jeff old enough to remember how bad the El Niño droughts of 1997/98 were.

Actually - El Nino in itself does not need to be bad for NZ economy ... depends on how the local weather plays out and how well the farmers are prepared. They certainly can't complain about lack of notice, and I assume that e.g. the new Canterbury Planes irrigation system (CPW) might get a good test this summer.

Might be even good if local farmers are prepared and global food productions shrinks => better margins :) ;

Here is a more detailled analysis produced for the last big El Nino event:

https://www.rbnz.govt.nz/-/media/449b54cc52d14db5ba409959d560ef5d.ashx?sc_lang=en#: ~:text=El%20Ni%C3%B1o%20refers%20to%20a,in%20the%2 0west%20in%20summer.

[thegreatestben]

https://www.newsroom.co.nz/heartland-breaks-ranks-to-disclose-distorting-behaviour-by-big-banks

[Snoopy]

https://www.newsroom.co.nz/heartland-breaks-ranks-to-disclose-distorting-behaviour-by-big-banks

Poor Leanne. Jeff never told her when she became Heartland 'Bank' Chief Executive that Heartland isn't really a bank. It is just a jumped up finance company that does *all* its banking through Westpac, and the 'bank' bit on the Heartland name was all a marketing exercise. No wonder Heartland isn't on a level playing field with the real banks.

SNOOPY