HGH - Heartland Group Holdings

[percy]

But Heartland have this much touted excess hair so even a 'light trim' could cut a reasonable amount off - and litter the hairdresser's floor and making them wonder why did I let it grow so long.

End result maybe somewhere between having excess hair and being bald. Short back and sides sounds reasonable

The huge Net Interest Margin means Heartland have "the best head of hair" of all the banks.
And it keeps growing a lot quicker than the other banks,.
So a "light trim" now and again keeps it nicely in place.
Though they do stand out in the banking crowd with their full head of hair,but it suits them..
I like them like that...lol.

[percy]

I wonder how Heartlands crop of hair compares to other finance companies. seeing they are really one in drag

Well 19,000 of their 38,000 depositors have been with them 10 years or more,so I guess they like HBL's full head of hair too.
Remember one thing W69,and it is worth not forgetting.Heartland Bank are a registered Bank,while none of the finance companies are.This means extra security for shareholders and for depositors', who accept a lower interest rate, knowing Heartland Bank must comply, and are monitored by The Reserve Bank of New Zealand.I think they too would like Heartland Bank having a growing full head of hair.

[nextbigthing]

But Heartland have this much touted excess hair so even a 'light trim' could cut a reasonable amount off - and litter the hairdresser's floor and making them wonder why did I let it grow so long.

End result maybe somewhere between having excess hair and being bald. Short back and sides sounds reasonable

Heartland could always cut some of this excess hair and sell it off to bald finance companies as wigs to help make them look a little prettier.

[Snoopy]

Well 19,000 of their 38,000 depositors have been with them 10 years or more,so I guess they like HBL's full head of hair too.

I saw a quote to that effect in the Heartland presentation with some amusement. Heartland didn't even exist ten years ago, not in anything like their current form. So how can Heartland claim ten year loyalty from customers?

I have been a 'loyal' Westpac customer for well over twenty years. But IIRC it was 'Trusteebank Canterbury' that I joined, not Westpac! I don't feel 'loyal' to Westpac, and keep thinking of moving my current account from there. My bank term deposit investments moved some years ago to Kiwibank and TSB!

Remember one thing W69,and it is worth not forgetting.Heartland Bank are a registered Bank,while none of the finance companies are.This means extra security for shareholders and for depositors', who accept a lower interest rate, knowing Heartland Bank must comply, and are monitored by The Reserve Bank of New Zealand.I think they too would like Heartland Bank having a growing full head of hair.

The above is true, and probably is a useful advantage to Heartland. This advantage may indeed mean that depositors are willing to accept a lower rate of interest than if Heartland was not a bank. And I think we can agree that this is good for shareholders. However, I think it pays to remember the 'banking advantage' for Heartland shareholders is that they can get away with paying that lower interest rate to depositors. And that flows through to a higher interest margin. This advantage is possible some would say because they are a registered bank. But from a position of competitiveness, this is ONE advantage, not TWO. Being a bank may cause Heartland to have an advantage. But it is not a SEPARATE advantage in its own right.

SNOOPY

[Snoopy]

I wonder how Heartlands crop of hair compares to other finance companies. seeing they are really one in drag

This is a great question. The problem is that all finance companies, and I include in that definition finance companies wearing bank suits, are a bit different. An obvious comparison is Heartland vs UDC. But as a potential investor, you can only buy shares in UDC through buying the ultimate ANZ parent in Australia which is a very different beast.

Another obvious comparison is HBL vs Turners Group. The problem there is that TNR now contains the old TUA auctions business which is very different to anything inside HBL. So this is why I have spent some time on the TNR thread, pulling the 'finance' part out of TNR using the segmented information provided in the TNR report. 'TNR Finance' provides a better measuring stick.

When I do a comparison between companies, I like to compare common 'stuff'. With finance companies I consider the basic building blocks of 'stuff' to be 'loans'. The underlying 'resource' that allows a finance company to operate I consider to be EBIT. The more EBIT a finance company can make, relative to the size of their loan book, the more 'naturally profitable' they are. So I consider the driving engine of any finance company to be:

EBIT/ (average loan book size)

Unfortunately in the real world both 'I' and 'T' need to be paid. So the amount of underlying parent bank debt can reduce the strength of this earnings engine.

Now if all loans were equal, then this is the only statistic any analyst would need. But as we know all loans are not equal. 'Haircuts' need to be taken from time to time. Indeed any finance company that does not build 'haircuts' into their normal business model is kidding themselves.

I consider a useful measure of 'possible haircutting' to be:

'impaired loans' / 'shareholder equity'

This is becasue it is ultimately we shareholders who have to pay for these 'haircuts'. And the greater the bad loans in relation to our shareholder equity, the more at risk we shareholders are.

So there we have in essence my way of answering Winners question.

1/ Look at the Earnings Capacity from the loan book on a 'normalised' basis.
2/ Balance this against the likelihood of shareholders having to take haircuts on bad loans.

Putting it all into practice is another step. I wish things could be simpler. But unfortunately, this is as simple as things are liable to get :-(

SNOOPY

[percy]

I saw a quote to that effect in the Heartland presentation with some amusement. Heartland didn't even exist ten years ago, not in anything like their current form. So how can Heartland claim ten year loyalty from customers?

I have been a 'loyal' Westpac customer for well over twenty years. But IIRC it was 'Trusteebank Canterbury' that I joined, not Westpac! I don't feel 'loyal' to Westpac, and keep thinking of moving my current account from there. My bank term deposit investments moved some years ago to Kiwibank and TSB!



The above is true, and probably is a useful advantage to Heartland. This advantage may indeed mean that depositors are willing to accept a lower rate of interest than if Heartland was not a bank. And I think we can agree that this is good for shareholders. However, I think it pays to remember the 'banking advantage' for Heartland shareholders is that they can get away with paying that lower interest rate to depositors. And that flows through to a higher interest margin. This advantage is possible some would say because they are a registered bank. But from a position of competitiveness, this is ONE advantage, not TWO. Being a bank may cause Heartland to have an advantage. But it is not a SEPARATE advantage in its own right.

SNOOPY

Snoopy >
Heartland Bank can claim their roots right back to 1875 when CBS was formed.Also SCB was formed in 1923,and Marac 1952.
I think you are being silly.
As for advantage,I am sorry you have lost me.
Being silly again?

[percy]

This post was in reply to a post that has since been deleted.
Are you implying The Reserve Bank of New Zealand were wrong to grant Heartland a banking licence and have not monitored HBL's financial statements,therefore not doing their job?
Are you also implying Heartland Bank are telling lies?

[Joshuatree]

Implying Implying ; hintng; suggesting HBL is a finance company and not a bank; rubbished HBL before with HUNFREDS of posts(fact) and then brought HBL (fact); using the WE word again speaking for the 3000. Admits he or friends/family were burnt by finance companies back when many collapsed so attacks HBL frequently with the common theme its a dodgy finance company and not a bank even let alone a good one. been banned before for this obsessive behaviour. If he was reasonable ; no problem.

[Beagle]

Post was a simple look at write-downs that Marac took, $85m, during the last period when they faced a serious stress test on part of their loan book, (commercial property loans 2009). Some people seem hyper sensitive to looking at history, want to put words in my mouth and don't seem to want to learn anything from it...go figure...

[K1W1G0LD]

There seem to be 2 things going on here , The canine is writing a book , not a very good one and using all the other posters to do his proofreading for him ........not gonna fly , never get off the ground too many errors and far too long winded .
w69 doing his impression of trying to like HBL....but does'nt really (that finance company thing again) , seems fixated on that, needs to move on .
And Dodgy The Egomeister , loves sticking his oar in and ruffling feathers etc............like I said before there's gurus and then there's real Guru's (Like Phaedrus ,sadly missed) . Did i say 2 things ,i threw an extra one in for good measure .
From what I can see HBL are doing a great job of being a BANK with a difference under trying economic conditions and credit too them , under the current management they'll only get better.