Sure you meant possibility Winner and agree there's always the possibility of a GFC Mk2. Nice image. BBB - Capacity to make timely payment - Adequate. I guess that's adequate unless the custard really hits the fan in a major way.
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Sure you meant possibility Winner and agree there's always the possibility of a GFC Mk2. Nice image. BBB - Capacity to make timely payment - Adequate. I guess that's adequate unless the custard really hits the fan in a major way.
Spitting hairs,or just nitpicking?
I took it to mean HBL were attracting funds at the same rate the Australian Banks were paying for their NZ deposits.
What ever way you take it,HBL they are achieving what they formed Heartland for,ie attract funds at a very low rate.
investors who don't understand the risk IMO.
BBB - = 1 chance in 30 (3.33%) of default within 5 years. A rated is 1 chance in 150 (O.67%) of default in five years. Investors should be getting a 3.33-0.67 / 5 = 0.53% premium per annum on 5 year term deposits with a BBB rated bank over what they can get on an A rated bank. Throw into the mix too the Reserve Bank's open bank resolution here and people accepting very low interest rates on long term deposit with HBL simply don't understand the risks, (albeit they are fairly minor) but they are certainly not getting a return commensurate with the risk taken. A lot of things can happen in 5 years.
Interestingly HBL's 5 year term deposit rate for over $20K is 3.8% (ANZ for example for 5 years is 3.6% per annum) and that return is fully taxable so for investors on a 33% tax rate their net return for the risk is 2.55% per annum.
Total return over 5 years is thus, (ignoring compounding) = 12.75%, less risk of default 3.33% = net risk adjusted return 9.42% / 5 years = 1.88% per annum net return less an adjustment for potential loss of capital due to the possibility of the Reserve Bank invoking its open banking resolution. This post shows why I will only bank with an A rated bank.
Proof of the pudding is in the eating.
"38,000 individual depositors,19,000 of whom have been with HBL 10 years or more."
That is known as loyalty.
It does not just happen.It has been earnt.
I seem to remember posters here saying HBL would not get through the government guarantee ending.Remember those ? rubbish off course.
96.7% chance they'll all be okay for the next five years too Percy.
With each years improving ROE,and net interest margin,profit,together with Heartland Bank carrying excess capital,and the fact NZ's outlook remains excellent, I would think those in the know, would rate their chance of being all OK for the next five years as closer to 100%.I know I do.
ps.I expect HBL's share price to be in excess of $3.00 in 5 years time.
And that is why I remain "well positioned."
Hey nextbigthing - that $1.60 later in the year is a now a pipe dream i reckon. I think the mood on the street is is now rather subdued and expectations might only be about $1.20 now ...maybe $1.30 if we lucky.
Looks like acquisitions off the agenda - need that excess capital in these times.
Current price now below the 50EMA, 100EMA and 200EMA. Thats not good is it.
What are you hearing on the street up your way mate?
I have banked with Westpac for 52 years.My business banking has been with them 43 years.
I have had the same accountant for 43 years.
I have dealt with Craigs for over 35 years.
I no longer hold any Westpac shares.
I hold Heartland Bank shares,which I have been steadily adding to.
I looked at opening an account with ANZ Securities,as well as Heartland Bank, and decided I could not be bothered filling out their forms.
I generally buy shares for the long term,ie I have been a share holder of Ebos for approx. 27 years.
Yeah me too my bank is Westpac ; but the bank i invest in in NZ to profit from is Heartland; what a great track record against the odds its carved out some great niches and risk wise its minimal compared with the small cap spekkies and Goldies i play with. Kinda like SCL i know a weather event could stuff things up occasionally but thats the risk I'm prepared to take; as is walking out the door.
With these sort of rates of household borrowing you'd think Heartland would be doing much better than expected .....must bea profit upgrade soon.
http://www.interest.co.nz/property/8...last-seen-2008
Numbers concentrate on housing loans but implied is strong growth in consumer borrowing (outside of home loans)
I'm told that Heartland will be Open for Business in late august when BNZ is Closed for Good
Closed For Good: BNZ Great stuff; hats off.
Quite right to pull me up on this Macduffy - my wording was a little sloppy.
Perhaps what I should have said was the Reserve Bank has decided that a minimum requirement for a bank is the "Capacity to make timely repayments." The minimum credit rating that would indicate this is BBB (as determined by Fitch in the case of Heartland). The Reserve Bank accepts the Fitch rating and all that this implies (likelihood of defaulting on customer deposits in any given year 1 in 30 - or if you accept a business cycle is six years, one business cycle in five).
Nevertheless the essence behind what I said, namely that the reserve bank accepts the Heartland BBB rating and the associated one in 30 year default risk that the BBB rating implies is correct.
SNOOPY