You won't be looking at the pretty pictures in the Ryman reports then
Ecoya Reports more to your style by sounds of it
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Heartland in their annual report shows market segment categories of risk. Heartland in a separate table lumps all loans together then tells us the quality of those loans: i.e. whether they are in default, have almost no risk of default or are something in between. But what Heartland does not do is take, say, all agricultural loans, and then tell us within that sector how much of those debts are liable to go bad.
A lot of people here make the mistake IMO, of believing that Heartland is a bank in the mode of the big 5. The truth is Heartland are distancing themselves from the big bank model, by tackling niche loan areas the big banks are averse to. Nothing wrong with that. In fact it is probably the most sensible strategy they could follow. But it does mean that how Heartland is buffeted by a changing economy is liable to be very different to the big banks.
For example, in a good year on the farm I believe Heartland will do poorly. Why would a farmer borrow from Heartland when they can get a much lower rate loan by expanding their mortgage? In a poor year though, the big banks might not be so keen to lend. In this instance Heartland's seasonal financing is liable to come to the fore.Quote:
I appreciate farmers would borrow primarily from the major banks. But what could be the level of indebtedness to HNZ for secondary lending behind the main banks ?
Thinking that by market segment analysis, you can gain a better insight to Heartland's loan portfoloio than Heartland do themselves is optimistic IMO.Quote:
In the event of another financial crisis the resilience or otherwise of the major banks would be a buffer to risk from secondary borrowing if borrowers defaulted mind you the major banks would ensure they held primary security over debtors assets.
Required reserve levels on their own are not that useful I agree. But stress testing the performance of bad loans against required reserve bank provisions, I believe is very useful. It may not give you as much information as you want as to which market sectors are waxing and waning. But you will never get that from Heartland, because it isn't reported. So we are left with distilling the information that is declared in its most useful form, which is what I am trying to achieve.Quote:
If you see what I am driving at - can we present varieties of HNZ risk in better detail to shareholders? Reserves required by the RBNZ on level of HNZ lending don`t inform us sufficiently.
SNOOPY
A fair chunk of the 'Consumer' loans relate to motor vehicles
Let us not forget Percy's wisdom here - if times get hard keep paying the car off before anything else otherwise I can't get to work (or the kids to school)
Good piece of wisdom that
Well researched niche markets are most probably more profitable ,and a lot safer than following the major banks who are over commitment to housing in both NZ and Australia.
A farmer has more sense than add to his mortgage.Better and cheaper going for a shorter term livestock or seasonal loan,or equipment loan.
Thanks for sharing your view mate.
I can't find 13 N.Z. stocks in different industries trading on realistic PE's with a solid outlook.
And that's a great point. It is a low beta stock with very low volatility so tight stops can be set and the lower volatility is supportive of a higher than usual allocation.
That's the $64,000 question that's also got me stumped. Unless you take on more risk like a stock such as AIR I can't see anything better.Quote:
SCOTTY;503077]I am definitely overweight with HNZ at around 40% of my portfolio. Frankly I just can not see any other stocks which are showing a gross 10% yield with good growth potential in a relatively stable investment sector that temp me to look elsewhere at present.
I would be most interested to hear of better alternatives to HNZ as other high yielding stocks such as the power companies and some retailers in particular tend to have either limited/riskier growth potential or in the case of PGW fluctuating seasonal earnings?
Please tell me. What are the better long term buys than HNZ at present?
Good to see you've taken on board the lessons from the school of hard knocks, (arguably the best school).
As most all of us know, portfolio theory has it that a well diversified portfolio of stocks, bonds, property and other assets classes gives the optimum return with the least risk...the trouble I have with this is a couple of factors.
1. Its very hard to get a broadly diversified portfolio of quality companies across a range of sectors in N.Z. without buying some stocks which are at present on really stupidly high PE ratio's and bond yields are artificially low all around the world as a result of quantitative easing.
2. What we saw with the GFC was that portfolio theory might be fine in theory but it simply didn't work all that well in practice with virtually all asset classes getting a proper belting.
I think there are however a couple of fundamentally good reason to have some sort of set limit on exposure to any one stock.
1. You might believe that you are absolutely right but what if you're wrong ? and haven't seen something that comes back to bite you, (loss mitigation and risk management strategies suggest some reasonable limit is appropriate)
2. I think portfolio theory works to some extent.
I'll stick with 20% max for any one moderate risk well managed company, less where there's specific identifiable risk's involved. Bond's look like a losing strategy to me at the current prevailing yields.
My silver holding is in the toilet and I won't add to that.
Cheers Roger,I definitely agree with you on the bond front apart from the works finance hybrid issue there's very little out there paying over 6% then you have to take 33% off for tax, at least works is imputed and increasing in yield upon reset,my APN bonds are due to be repaid early and they are the last of my high yield bonds so its all shares for the foreseeable future:cool:
I am very excited about this announcement (PDF). While it's unclear how much upside it will generate, I think it says a lot about management that they really looking outside the box. Peer-to-peer lending could be a massive growth area.
Well Winner69,it looks as though you are getting your wicked way!!!!
Heartland are taking a 10% shareholding in HarMoney NZ's only licensed peer-to-per lending platform.
I note HarMoney have a very experienced board.
Beaten to it
NZX and Media Release
HEARTLAND TO TAKE SHAREHOLDING IN HARMONEY
8 September 2014
Heartland New Zealand Limited (Heartland) (NZX: HNZ) advises that it has taken an approximately 10%
shareholding in HarMoney Corp Limited (HarMoney), New Zealand’s only licensed peer-to-peer lending
platform.
In conjunction with this, Heartland Bank Limited is providing a funding line to enable lending to a range
of individual borrowers using the platform.
Heartland's strategy is to occupy leading positions in niche markets through specialist offerings which
are different to traditional banks. Likewise, HarMoney operates a lending model that challenges those
being offered by mainstream banks - a model that can change the way people borrow and invest.
The shareholding in HarMoney complements Heartland’s strategy and provides a potentially valuable
channel to attract customers in the Household sector that current distribution networks may not reach.
The funding line will help provide initial momentum, complementing the investments made by Retail
investors. HarMoney and Heartland also intend to build on this relationship and are confident that
scope exists to create high value products for New Zealand consumer and business customers in New
Zealand.
- Ends -
For further information, please contact:
Jeff Greenslade
Chief Executive Officer
Heartland New Zealand Limited
DDI 09 927 9149