$1.36, down over 6% today with an hour left to trade... and we won't talk about yesterdays drop either... winner, you reckon the race between ARV and HGH back on?
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$1.36, down over 6% today with an hour left to trade... and we won't talk about yesterdays drop either... winner, you reckon the race between ARV and HGH back on?
https://www.nzherald.co.nz/business/...ectid=12179078
Heartland led the market lower, falling 6.9 per cent to $1.35, its lowest close since August 2016. The local lender has dropped 11 per cent since the Reserve Bank unveiled plans that would require a significant increase in the capital held by banks. Macquarie analysts estimate Heartland would need to boost its capital holdings by about $1 billion.
Anyone heard anything from heartland.
Heartland said this yesterday
http://nzx-prod-s7fsd7f98s.s3-websit...529/292595.pdf
To put that possible $1 billion extra capital needed shareholder equity at June 2018 was only $664m. That would be a huge injection eh ...but when one is highly leveraged to start with that would good.
Well Heartland Bank will require a 15% equity ratio.
We know HBL had a 13.4% equity ratio.
I believe to take that 13.4% ratio to 15% would require $69mil extra equity.[over 5 or more years].
However HBL included Australian REL and other Australian business.
Take that out of HGH,then we have to find out how much capital that 15% requires.
I really do not know,but I can see Heartland Bank having 15% equity ratio,but I will have to see what equity ratio HGH has.
To suggest HGH needs to raise a lot of capital to support Heartland Bank is with out foundation.
The rapid growth in Australia will mean at some stage HGH will want more capital to support further ongoing growth.
RBNZ report reads as if they also going to tighten up on how equity ratios are calculated .....banks are a bit dodgy how they do it now.
Good points, the alarmists leaping to conclusions about getting to 15% is just wrong, but the market recognised that "The rapid growth in Australia will mean at some stage HGH will want more capital to support further ongoing growth." and on the back of a US market rout to recent lows, that NZX diligently follows, it's not surprising HGH SP has been punished along with the other banks who incidentally have not disclosed that they will require further capital raising, like Heartland probably will.
Listen to the market, it has a schizophrenia about it but it does foretell discomfort and concern, in this case potentially further dilution right when the company is looking to expand into new international markets and the RBNZ raise the bar on local capital adequacy. One can't ignore the market, it's been saying for a long time that Heartlands' SP got way ahead of itself, all we're trying to figure out is how far ahead that actually is.