HGH - Heartland Group Holdings

[winner69]

The 'shrinking equity' is mainly due to only making $6m for shareholders in the last year (those writedowns that dont really matter the culprit) and paying out more than that in dividends. Yes equity declined eh Snoopy but who cares anyway - its only a number on piece of paper and the HERO products will improve the situation anyway.

So the equity ratio implies a leverage of 7 to 1 ..... compared to the Big Four and other banks this is bllody good ...... but in old fashioned terms really high. But if everybody plays the highly leverage game so does Heartland.

And declining equity is good ... it helps ROE

[Snoopy]

The 'shrinking equity' is mainly due to only making $6m for shareholders in the last year (those writedowns that dont really matter the culprit) and paying out more than that in dividends. Yes equity declined eh Snoopy but who cares anyway - its only a number on piece of paper and the HERO products will improve the situation anyway.

So the equity ratio implies a leverage of 7 to 1 ..... compared to the Big Four and other banks this is bloody good ...... but in old fashioned terms really high. But if everybody plays the highly leverage game so does Heartland.

And declining equity is good ... it helps ROE

The last time the finance sector played this high leverage game, virtually every finance company in New Zealand collapsed, including that bastion of virtue, South Canterbury Finance that no-one ever thought would go down. Heartland itself arose out of the near collapse of PGC, and the property portfolio problems that Heartland carry today come from that era.

However it couldn't happen again could it? I mean property is such a bargain, it really doesn't matter how much you borrow against that does it? And of course farmers have so much equity in their farms now, they can just raise their big four bank loan a notch for the seasonal finance. No need to go to a second tier lender like Heartland! But as you say Winner, everyone is playing the game so that is proof positive it is all OK.

But what is that Wheeler bloke on about down in Wellington? Some sort of Reserve player, who should have stayed in the pavilion with his head down? Do you suppose he is just drinking bad coffee?

SNOOPY

[Snow Leopard]

Once again there is no mention of Tier 1 or Tier 2 in the Heartland FY2012 report.

The 'best case' scenario is that all loans are Tier 1. $2,097.553m of loans are outstanding. 20% of that figure is:

0.2 x $2,097.553m = $419.5m

Heartland has total equity of $370.5m which is well below the 20% of loan target no matter what the tier classification of the loans.

Result: FAIL TEST

Heartland have increased their lending and reduced their capital by paying out dividends, hence the poor result on this test. Last year I started a barrage of derision by suggesting a capital raising was looking likely when Heartland failed this same test. Over that FY2013 year Heartland obtained their banking licence (good, although they don't have the same freedom as other banks as regards capital ratios), decided to lend more against tier 2 assets (bad from this statistic's point of view, which is not to say tier 2 loans aren't profitable). Furthermore during the year the so called Basel 3 requirements, designed to shore up the stability of banks and requiring banks to carry more capital have been implemented (bad for this statistic).

I don't wish to speculate again on the overall likelihood of a cash issue to shore up HNZ in FY2014. All I will say is that given what has happened over FY2013, and looking at the trend in this statistic, such a cash issue to shareholders or a third party placement of HNZ shares is looking much more likely now.

SNOOPY

I see 'Tier 1' and 'Tier 2' and 'Basel 3' but am otherwise confused by what you are trying to prove here. You seem a 'little confused' on this sort of stuff.

At 30 Jun 2013 Heartland Bank has:
A risk weighted exposure (to loans and things) of $2,359,613,000 which requires $283,154,000 of Tier 1 Capital (12%) under the Conditions of Registration;
An actual Tier 1 Capital of $324,642,000 which provides a capital ratio of 13.76% (2012 was 14.54% so a step back here).

Just for fun I am not going to tell you from which of the full year results documents I extracted this figure from.

Best Wishes
Paper Tiger

[baller18]

have u been accumulating moosie? It would be "too cheap" right now for you! lol

[baller18]

have u been accumulating moosie? It would be "too cheap" right now for you! lol

opps wrong post, this is suppose to be for Dil, sorry guys

[hilskin]

Some big numbers being traded today off market.

[RTM]

Percy.....are you selling out ?

84
13,183,333
12:00 SP

[777]

That will be PGW then.

And the buyer would be?

[percy]

Percy.....are you selling out ?

84
13,183,333
12:00 SP

Just need to move the decimal point a few places to the left to get my holding.A good few places in fact.!! lol.
Yes Sparky it looks as though PGW have gone.Looking forward to seeing who brought them?GG?

[percy]

With any luck - its a share buyback! Probably an institution. Possibly a broker underwriting and then releasing to clients (less likely).

The known overhang is now gone. Looking forward to HNZ rocking and rolling now.

We are dangerously well positioned!!