Liquidity Buffer Ratio HY2015 (Period Ended 31/12/2014)
Quote:
Originally Posted by
Snoopy
A change of tactic is required here as six months ago I was writing tosh. The revised HY2014 report is as follows:
Time to look at the Liquidity Buffer ratio, the balance between monies borrowed and monies lent and matching up those maturity dates using a one year time horizon. The equation we are looking to satisfy is:
(Total Current Money to Draw On)/(Net Current Loans Outstanding) > 10%
On one side of the equation, we have borrowings.
HNZ BORROWINGS
HNZ has total borrowings of $2,524.460m (see Statement of Financial Position). This is made up of:
1/ Term deposits ($1,805.954m) lodged with Heartland (see note 11).
2/ Securitized Borrowings total $267.645m
3/ Subordinated Bonds (new for HY2014 but only worth $3.369m)
Note 11 gives no clear breakdown given of current and longer-term borrowing maturity dates.
The group has securitized bank facilities totalling $400m, all in relation to the Heartland ABCP Trust 1 (ABCP Trust). ABCP Trust has a maturing facility of $400m maturing 7th August 2014 (barely 5 weeks away),
These facilities are drawn by $268m (c.f. FY2013: $259m).
All securitized asset activity relates to a time frame no more than one year out in the future, but in this case just 5 weeks. Nevertheless, maturity date rollover renegotiations have happened without trouble over the last two years.
The amount of securitized holdings drawn has increased by $8m (3.1%). The maximum amount that can be borrowed under securitized arrangements has dropped too, from $500m to $400m. This is because the extra CBS Trust securitisation arrangements, worth up to $100m, have been wound up. The net result of all this is that the borrowing headroom available using securitized bonds is now:
$400m - $268m = $132m
All three sources of funds (itemized above) have been on loaned to customers who want loans.
HNZ LENDINGS
Customers owe HNZ 'Finance Receivables' of $1.905.850m. There is no breakdown in note 10 as to what loans are current or longer term. However, if we look at note 18b, we can see the expected maturity profile of total finance receivables due over the next twelve months.
$180.669m + $463.129m + $349.681m = $993.479m
These are offset by short-term borrowings over twelve months of
$599.902m + $751.307m + $647.731m = $1998.980m
Thus, the net expected maturity of receivables is:
$993.479m - $1,998.980m = -$1,005.501m
The negative sign means that less money is coming in from loans to customers that have matured, than the amount of money due to be repaid to the debenture holders. Such a gap can be closed by simply taking on more debenture borrowings. Nevertheless, it is also prudent to have some back up bank borrowing headroom (HNZ has $132m) to partially close the gap.
$132m / $1,005.501m = 13.1% > 10%
=> Pass Short term liquidity test
Time to look at the Liquidity Buffer ratio, the balance between monies borrowed and monies lent and matching up those maturity dates using a one year time horizon. The equation we are looking to satisfy is:
(Total Current Money to Draw On)/(Net Current Loans Outstanding) > 10%
Numbers are taken from the interim report dated 31-12-2014.
On one side of the equation, we have borrowings.
HNZ BORROWINGS
HNZ has total borrowings of $2,657.084m (see Statement of Financial Position). This is made up of:
1/ Term deposits ($1,784.628m) lodged with Heartland (see note 14, IR2015).
2/ Bank Borrowings totalling $565.519m
2/ Securitized Borrowings totalling $303.558m
3/ Subordinated Bonds worth $3.379m.
IR2015 does not give a breakdown given of current and longer-term borrowing maturity dates.
The group has securitized bank facilities totalling $350m, all in relation to the Heartland ABCP Trust 1 (ABCP Trust). The ABCP Trust facility of $350m matures on 4th August 2015.
These facilities are drawn to $304m (c.f. FY2014: $229m).
Securitized asset maturity date rollover renegotiations have happened without trouble over the last two years.
The amount of securitized holdings drawn has increased by $75m (33%). The maximum amount that can be borrowed under securitized arrangements has dropped again too, from $400m to $350m. The borrowing headroom available using securitized bonds is now:
$350m - $304m = $46m
All four sources of funds (itemized above) have been on loaned to customers who want loans.
HNZ LENDINGS
Customers owe HNZ 'Finance Receivables' of $2,749.232m. There is no breakdown in note 12 IR2015 as to what loans are current or longer term. However, if we look at the legal declaration to the reserve bank
http://www.heartland.co.nz/_template...x?documentid=5
and select that for December 2014 more detail is available. Note 19 from declaration DEC2014 , shows the expected maturity profile of total finance receivables due over the next twelve months.
$88.187m + $568.729m + $439.009m = $1,095.925m
These are offset by short-term borrowings expected to be repaid over the coming twelve months of
$5.132m + $310.986m + $184.161m = $500.279m
Thus, the net expected maturity of receivables is:
$1095.925m - $500.279m = $595.646m
The positive sign means that more money is expected coming in from loans to customers that have matured, than the amount of money due to be repaid to the debenture holders.
=> Pass Short term liquidity test