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09-05-2016, 08:50 AM
#7441
Originally Posted by winner69
Respected Massey banking expert David Tripe says current low dairy prices are probably the new norm - staying low for longer than most expect
Yes dairy is weak, I think everyone acknolwedges this... what I do think is great, is Heartland's many other growth opportunities, through niche markets, such as reverse mortgages, will be interesting to get an update on how things are going
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09-05-2016, 09:44 AM
#7442
Originally Posted by winner69
Respected Massey banking expert David Tripe says current low dairy prices are probably the new norm - staying low for longer than most expect
Won't worry HBL directors, their rural lending team will presently be hard at work refinancing most of their overdue dairy loans (except for a few really toxic ones which they might bite the bullet on), just before balance date and clean their balance sheet up and then they can tell shareholders how good they are and what a low percentage of their customers are in arrears and how good they are in supporting their clients through this...spread the losses over many, many, many years and nobody will notice eh, and senior management will still get most of their juicy bonus's, cunning plan ! Suppose they will talk about acquisitions again at the next annual meeting to gee-up shareholders yet again.
Last edited by Beagle; 09-05-2016 at 09:59 AM.
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09-05-2016, 10:48 AM
#7443
Originally Posted by winner69
Think best strategy is to hold and hope like hell somebody takes them over soon at a huge premium. (Only way to get to 160 by xmas nextbigthing)
There was a modest private business jet parked up in Christchurch the other day. Apparently after years of travelling in economy, someone finally convinced Buffet to buy a private jet. A modest one was all he would purchase of course.
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09-05-2016, 12:27 PM
#7444
Originally Posted by Roger
refinancing most of their overdue dairy loans (except for a few really toxic ones which they might bite the bullet on), just before balance date and clean their balance sheet up and then they can tell shareholders how good they are and what a low percentage of their customers are in arrears and how good they are in supporting their clients through this...spread the losses over many, many, many years
I have been believing that unless the rural lending team is incompetent, the only losses are the "few really toxic ones that they bite the bullet on".
Have I got this wrong?
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09-05-2016, 12:56 PM
#7445
Originally Posted by davflaws
I have been believing that unless the rural lending team is incompetent, the only losses are the "few really toxic ones that they bite the bullet on".
Have I got this wrong?
The real problem is management are usually rewarded with generous bonus's for meeting defined profit targets so they're incentivised to take a liberal view of which loans are totally toxic with no possibility of recovery, heavily in arrears with some possibility of recovery, (often some bankers refinance these sort of loans just prior to balance date to make them look better), doubtful with a moderate probability of recovery and simply overdue for reasons other than systemic issues like dairy being too low.
One of the issues you need to watch for is the real loan to value ratio's of the average loan to the dairy sector. By real I mean that the values used in the original loan applications will no longer be valid unless they've undertaken fresh valuations in the period between about March 2016 to June 2016 after the huge fall in dairy land, stock and machinery prices in February 2016. I think from a practical perspective its unlikely that a significant part of their dairy loan portfolio would have had fresh valuations unless the loan is actively under review. If HBL are using old valuations their stated loan to value ratio is highly debateable.
Investors need to look at how the other banks are faring with their loan provisioning and the substantial additional provisioning they're applying and ask themselves is it really realistic for HBL to be trying to claim their situation is so much better. Questions over asset quality are by no means unique to HBL, in fact we're seeing a very wide range of banking stocks around the world have their share prices come under serious pressure.
The question people might like to ask themselves is why would it be any different for HBL ? Yes they have a better capital ratio than many other banks and as such are in a better position to withstand write-off's but that doesn't change the position in regard to questions over asset quality and while that remains its hard to see the SP gaining momentum. With balance date just around the corner and work by the accountants and auditors soon to get underway this is a good time of year for shareholders to be pondering whether HBL will be forced to take a more realistic look at their dairy loan provisioning in light of the extended drop and especially in the context that there is no discernable light at the end of the tunnel. Around 8% of the bank's loan portfolio.
As always folks, DYOR and this post is not intended to be a recommendation. Just food for thought.
Disc: I don't hold and am not looking to buy on any decline.
Last edited by Beagle; 09-05-2016 at 01:05 PM.
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09-05-2016, 01:08 PM
#7446
Originally Posted by davflaws
I have been believing that unless the rural lending team is incompetent, the only losses are the "few really toxic ones that they bite the bullet on".
Have I got this wrong?
You are spot on.HBL have very low exposure to dairying.[Under 8%;,other banks over 10%+].
You can rest assured there are no incompetent's working at HBL.
Of all Australasian Banks, Heartland Bank's directors and management have the largest % ownership.
As per everything in life,you look after your own very carefully,and avoid incompetent's.
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09-05-2016, 01:21 PM
#7447
Originally Posted by percy
You are spot on.HBL have very low exposure to dairying.[Under 8%;,other banks over 10%+].
You can rest assured there are no incompetent's working at HBL.
Of all Australasian Banks, Heartland Bank's directors and management have the largest % ownership.
As per everything in life,you look after your own very carefully,and avoid incompetent's.
C'mon now percy - you know jolly well that basing your claim thats heartlands 8% exposure is 'very low' just because other banks are 10% plus is totally irrelevant
That 8% is still about a $240m exposure.
I won't make any comment about other banks cast offs
”When investors are euphoric, they are incapable of recognising euphoria itself “
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09-05-2016, 01:36 PM
#7448
Originally Posted by winner69
C'mon now percy - you know jolly well that basing your claim thats heartlands 8% exposure is 'very low' just because other banks are 10% plus is totally irrelevant
That 8% is still about a $240m exposure.
I won't make any comment about other banks cast offs
Neither will I.....
Except I always trust people with "the owners' eye",more than the "hired help".
NB.Look at the "hired help" at AIR.You don't see that at Heartland.!!.They value their shares.
Why? Because they are confident in their own abilities.
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09-05-2016, 06:17 PM
#7449
Originally Posted by Roger
.....Suppose they will talk about acquisitions again at the next annual meeting to gee-up shareholders yet again.
Heck, that's not until the end of the year but you maybe be spot on.
Probably they will be taken over before they get around to buying anything themselves ....and possibly they will not even return the much touted 'excess' capital they have
”When investors are euphoric, they are incapable of recognising euphoria itself “
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09-05-2016, 06:57 PM
#7450
Originally Posted by winner69
Heck, that's not until the end of the year but you maybe be spot on.
Probably they will be taken over before they get around to buying anything themselves ....and possibly they will not even return the much touted 'excess' capital they have
cmon winner nail your colours to the mast...are you pro hbl or not...at least with percy and roger we know which team they bat for.....that fence your sitting on is getting wobbly...which way you gonna jump
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