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19-09-2013, 04:53 PM
#2121
Originally Posted by CJ
Snoopy - do you have any reason to believe that rollovers and new deposit's would not be forthcoming?
I would argue, without access to any empirical evidence, that they are more likely to increase. As Heartland becomes more well known, which was in part the reason for getting the work "bank" at the end of "Heartland", they should increase. They pay a higher rate than the big 4 banks, in part due to its lower credit rating and in part due to the fact it onlends those funds at a higher rate (ie. less home loans).
I am not going to argue this point with you CJ. You may well be right in that tacking the word 'bank' onto the Heartland name late last year was just the master stroke needed to bring in the extra $281m of short term budgeted for debentures over FY2014.
My 'empirical evidence' that this is a stretch target is that Heartland have more or less the same physical footprint as last year, including some obvious holes. I was shocked to find out from Percy that Heartland had no branch in Timaru for example.
So divide the projected increase in short term debentures over the existing short term debenture base: $281m/$1186m means a 23.7% increase in short term deposits from the same store footprint. How many chains of any kind do you know that are budgeting on that kind of increase over a single year? I guess it is possible, but those frontline Heartland staff are going to have to work hard to achieve it.
SNOOPY
Last edited by Snoopy; 19-09-2013 at 10:33 PM.
Reason: Fix transposed figure
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19-09-2013, 05:13 PM
#2122
Originally Posted by percy
One quick read says your are misguided, and will look even more foolish when again proven wrong. HNZ have never had funding problems.
No funding problems eh?
What about when Heartland took over the PGW finance loans? Part of the deal was PGW had to subscribe new capital to Heartland to help shore it up before they would take any PGW Finance loans on. Even then Heartland wouldn't take on all the PGW Finance loans without a PGW guarantee on one difficult chunk of loans.
Still given Heartland have only been in existence in their current form for two years, I would argue that is not enough time to build an operational history either good or bad.
It is not great that Heartland have had any funding problems given their history is so short.
They came through the Govt Guarantee with excess funds,have paid back MARAC debentures, and their treasury dept have made sure they retain their faithful depositors.
Yes they have. Total non securitized borrowings are up from $1,738m to $1,883m. That is an increase of 8.3% over the last year. That still makes the 23.8% increase in shorter term borrowings planned in FY2014 look like a stretch though.
SNOOPY
Last edited by Snoopy; 19-09-2013 at 05:15 PM.
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19-09-2013, 05:23 PM
#2123
Time will keep your 100% being wrong record intact.!
No issues.!
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19-09-2013, 07:09 PM
#2124
A Giant Leap Sideways for Crabkind
Originally Posted by Snoopy
I wouldn't have too many concerns about having Heartland as part of retirement portfolio. Indeed I may yet buy some HNZ for myself for purely that reason. My concern would be for those who drastically overweight their portfolio in HNZ shares under the assumption it is an absolutely sure thing. It isn't.
SNOOPY
It is good to see your stance on HNZ becoming a little more reasonable Snoopy.
Now you have started throwing around this $218m (originally an un-transposed $281m) of 'planned extra funding' and calling it a 'stretch' and generally giving the impression that this is a necessary but difficult thing to achieve, suggesting the disappearance of most of the companies equity and other doom and gloom.
But...
As your favourite Note 38 itself says:
"The below does not reflect a forward looking view of how the Group expects actual financial assets and liabilities to perform in the future, as it does not include new lending and borrowing."
You can probably understand that I am a bit perplexed by your assertion on this one.
Just how did you manage to jump to this conclusion, Snoopy?
HNZ is doing well and their loan/borrowing balance is not a problem for the foreseeable future.
Best Wishes
Paper Tiger
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20-09-2013, 02:39 PM
#2125
Originally Posted by Paper Tiger
Now you have started throwing around this $281m of 'planned extra funding' and calling it a 'stretch' and generally giving the impression that this is a necessary but difficult thing to achieve, suggesting the disappearance of most of the companies equity and other doom and gloom.
But...
As your favourite Note 38 itself says:
"The below does not reflect a forward looking view of how the Group expects actual financial assets and liabilities to perform in the future, as it does not include new lending and borrowing."
You can probably understand that I am a bit perplexed by your assertion on this one.
Just how did you manage to jump to this conclusion, Snoopy?
The 'contractual liquidity profile' and an 'expected liquidity profile' (note 38) for the twelve months going forwards from 1st July 2013, I have compared with the equivalent profile a year earlier.
You imply PT, that Heartland will be able to reduce lending and/or the debenture money taken on board to match the cashflows desired. Well yes this flexibility does exist, but it also existed last year. And since Heartland are still operating, we can assume this flexibility was used to good effect.
Fast forward to this year and the desired amount of new or extra rolled over debentures has gone up by $281.033m as calculated in post on this thread 2539. Heartland can close this gap in several ways:
1/ Increase the projected rollover rate of existing debentures.
2/ Bring in brand new debenture money to plug the gap.
3/ Reduce the short term loan book below budgeted levels
4/ Have a cash issue for shareholders OR
5/ A combination of two or many of the above.
However, none of these methods eliminates the $281.033m short debenture contracted shortfall in the business plan. 1 to 5 merely represent different ways of tackling it. Loan book reduction is not something I have dwelt on. But I am sure farmers would not want to see their seasonal loans called in before their cashflow arrives. Do you see short term loan book reduction as an alternative? Percy has never liked it when I refer to Heartland as the 'incredible shrinking bank'.
SNOOPY
Last edited by Snoopy; 20-09-2013 at 02:47 PM.
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20-09-2013, 02:46 PM
#2126
Never liked it because it is not correct.!
What we are seeing is Heartland concentrating on better margin lending.
This is what they have said they would do,and it is what they are doing.!
Listen to what they say they will do,because that is what they will do.
I keep telling you, you are wasting our time and your own time.
Time and results have always/and will always prove you wrong.!
Last edited by percy; 20-09-2013 at 02:51 PM.
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20-09-2013, 03:28 PM
#2127
Good sarcasm went to waste
Originally Posted by Snoopy
...You imply PT, that Heartland will be able to reduce lending and/or the debenture money taken on board to match the cashflows desired...
Actually what I implied was that you have completely failed to understand the information in the 'expected maturity profile' part of Note 38, and this despite that they explain what the data represents.
Your assertion is based on the misunderstanding of the data and has no validity at all.
You need to understand how banking works before making such extrapolations, then you will spot the nonsense yourself before posting.
Best Wishes
Paper Tiger
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20-09-2013, 03:32 PM
#2128
Snoopdog, banks don't operate in a closed bubble. They are able to go to markets to attract funding in all sorts of ways, using all sorts of market signals. They employ specialist staff to manage these responses and risks. I am sure they have competent people in charge.
You are fretting over this too much for your own good, and if percy has any hair, he is tearing it out.....rapidly, and paper tiger is tearing himself to shreds too.
bury the bone in your back garden and move on.
Last edited by Xerof; 20-09-2013 at 03:33 PM.
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20-09-2013, 04:04 PM
#2129
Originally Posted by Paper Tiger
Actually what I implied was that you have completely failed to understand the information in the 'expected maturity profile' part of Note 38, and this despite that they explain what the data represents.
Your assertion is based on the misunderstanding of the data and has no validity at all.
You need to understand how banking works before making such extrapolations, then you will spot the nonsense yourself before posting.
Just to reprise, the figure of $281.033m was calculated, from note 38, as follows:
$1,467.505m - $1,186.472m = $281.033m
Where the first figure in the subtraction is the difference between contracted and expected debentures with a 12 month or less maturity listed in the FY2013 financial notes, being a projection into the FY2014 year. The second figure in the subtraction is the difference between contracted and expected debentures with a 12 month or less maturity listed in the FY2012 financial notes, being a projection into the FY2013 year.
You can't deny the maths. You can only deny the significance. And given I am subtracting one apple from another, you can't deny that the FY2014 business plan asks for this much more money from some source.
SNOOPY
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20-09-2013, 04:30 PM
#2130
Sorry, Snoopy, like others I think you're worrying overmuch about HNZ's funding. All banks have to actively manage this side of the business and have ongoing programs to raise/replace deposits, debentures, swaps and hybrid securities of various types. HNZ is no different and will have a Treasury department like the major players. Sure, they don't have the credit rating of the majors and will therefore pay a little more for their funds but there is no suggestion that these markets have become "difficult" for any of the NZ banks, including HNZ.
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