HGH - Heartland Group Holdings

[Snoopy]

CJ wrote:
"While they aren't a bank in the traditional sense (ie home loans), the cost of funds is one of the great benefits they get from being a registered bank."

Not something that Snoopy would ever recognize?

Too concerned with why the numbers show that HNZ should not be granted a bank license.

The problem is did a bank licence improve Heartland's credit rating? The answer appears to be no. So it looks like the cost of funds is not related to becoming a bank!

SNOOPY

[percy]

The problem is did a bank licence improve Heartland's credit rating? The answer appears to be no. So it looks like the cost of funds is not related to becoming a bank!

SNOOPY

Snoopy your record of being 100% wrong remains intact.
HNZ has gone from paying 130 basic points above what "the Aussie banks"pay to 30 basic points.
Think how much they are saving on nearly 2bil.!!! Bit dollars.!! Bank Licence proving it's worth.

[CJ]

The problem is did a bank licence improve Heartland's credit rating? The answer appears to be no. So it looks like the cost of funds is not related to becoming a bank!

I accept that it may be too early to tell but I think long term it should for two reasons. Having 'Bank' in their name will open them up to new markets (ie. large funds which can loan to banks but not finance companies) and will also give them more credibility in the NZ market with retail investors (ie. those stung by finance companies but still wanting term deposits etc).

I did see something this morning(on Twitter I think) that someone was thinking of dropping Heartlands credit rating. I was rushing to the gym so didn't open the link to see if it was a real threat.

[percy]

[.

I did see something this morning(on Twitter I think) that someone was thinking of dropping Heartlands credit rating. I was rushing to the gym so didn't open the link to see if it was a real threat.[/QUOTE]

That would be Snoopy on twotter.!!! lol.

[andysh]

http://www.interest.co.nz/news/64508...-bank-and-5-cr is the article on the downgrade.

[luigi]

http://www.interest.co.nz/news/64508...-bank-and-5-cr

" However, The Co-operative Bank and Heartland Bank are already at the lowest rung of the investment grade ladder with BBB minus ratings. The Reserve Bank has previously said when granting bank licenses that it preferred an institution to have an investment grade rating. "

"We may lower the ratings on the eight New Zealand banks that are on negative outlook by one-to-two-notches within the next two years if economic vulnerabilities worsen," S&P said.

[CJ]

That would be Snoopy on twotter.!!! lol.

Trust only your official sources

I try not to follow trollers.

Andysh has provided the relevant link.

[andysh]

A lot of the talk in the article is about "increasing risk that a sharp correction in property prices".

As has been discussed in the thread, this is something that HNZ wants to get out of, so on overall I am not to concerned at all. Do realise that a correction will have a flow on effect to the rest of the market however (farmer having to sell / repay some of the mortgage on the house, delays payments on the machinery etc.).

Disc: Hold.

[Xerof]

HNZ has gone from paying 130 basic points above what "the Aussie banks"pay to 30 basic points.

percy, this may well be the case, but I wouldn't be shouting that from the rooftops. You forget that a lot of loan facilities are based on a margin over cost of funds, and borrowers will also be renegotiating borrowing costs lower to get their share of the margin improvement HNZ has been gaining. It's never a one way street. Stephens won't readily admit this unless directly asked.

I guess the next set of results will show how much margin improvement is captured, but to say it's 1% on 2 billion is a brave call

BTW, the correct term is "basis points"

[Xerof]

The article is inferring that a downgrade would leave the banking license in peril. I'm not sure that would be automatic. After all, it was granted in the knowledge that they were on the lowest rung.

I think the RBNZ would make their own minds up, and not 'rely' on rating agencies to determine the fate of a banking license

Keep calm and carry on chaps