HGH - Heartland Group Holdings

[percy]

Good discussion here on ROE, but I think some of you Heartlanders see ANZ on a pedestal that is higher than it should be. From a bankers perspective the amount available to loan is tied to the amount of 'tier' capital available to be loaned against. In the case of Heartland 'Tier Capital' and shareholders equity are one and the same thing. But the ANZ and teh other big banks have other sources of 'Tier capital' not available to Heartland.

Perusing my latest ANZ report (from 2012) page 58 lists total shareholders equity as $41.22 billion.

Now go over to page 117 and you will $752m of US trust securities (currently also Tier 1 capital) and three issues of ANZ convertible preference shares adding up to $5,114m (I believe these currently rank as Tier 2 capital). Perpetual subordinated notes of $953m add more tier 2 capital.

Below that is a list of more subordinated notes. Those maturing five years into the future can be fully regarded as more tier 2 capital amounting to $4,632m. Those maturing in four years time ($582m) need to be discounted 20% to arrive at yet more tier 2 capital of $466m.

As at 30th June 2012 ANZ has $5,114m + $4,632m + $466m = $10.212b of Tier 2 capital. That is less than 50% of the available Tier 1 capital ($41,220m + 752m = $41.972b).

So all of that tier 2 capital is available to be borrowed against.

Summing up all the Tier 1 and Tier 2 capital then, ANZ has $52.184b of Tier 1 and Tier 2 capital to back up their loans.

For FY2012 the ROE based on end of year shareholders equity is:

$6,011m/$41.220m = 14.6%

But if you do the same calculation on tier 1 and tier 2 capital, the Return on 'backing capital' is a rather lower.

$6,011m/$52,184m = 11.5%

That is close to the 10% ROE that Heartland is projected to achieve for FY2013.

In addition to this Heartland in common with all other banks will be facing the new Basel III capital conservation buffer(CCB) requirements that will increase the backup equity required to be held on the balance sheet significantly.

Even assuming all those doubtful Heartland property loans on the books coming good (no more capital destrying provisions for bad debts) , the picture that emerges here is irrefutable. Heartland has a very fully stretched balance sheet as everything stands now. There is very little room for growth beyond FY2013 with such a constrained capital base

SNOOPY

As always you will be proved 100% wrong.!!
Plenty of capacity.
Watch out for an acquisition by Heartland.!!
Acquisition will not require capital unless it is FPF,which would be a game breaker and would be well supported .

[percy]

That's a big call Percy. IMO Snoopy is mostly right. Any acquisition, not involving some sort of swap, will require more capital.

Big call? Read the latest presentation given by Michael Jonas to the NZX Emerging & Mid Cap Companies Conference.Harvey Specter gave the link post no.1320.
It is a continuation of the agm presentation.Acqusition,most probably in motor vehicle finance.
HNZ have always done what they have said they will do.Snoopy remains 100% wrong.
Again at the agm they spoke of having too much capital and very high liquidity.Again this is in complete contrast to Snoopy's posts.
Big call? No, a very simple easy call,made by reading and listening to what is being said and written.Heartland speak and write very clearly and honestly,about their business.They know their business.
In an earlier post I suggested HNZ could take over MTF with out making a call on shareholders.I stand by that statement.

[Snow Leopard]

Good discussion here on ROE, but I think some of you Heartlanders see ANZ on a pedestal that is higher than it should be....

....Even assuming all those doubtful Heartland property loans on the books coming good (no more capital destrying provisions for bad debts) , the picture that emerges here is irrefutable. Heartland has a very fully stretched balance sheet as everything stands now. There is very little room for growth beyond FY2013 with such a constrained capital base

SNOOPY

As they say never get involved in a butt-kicking contest with a porcupine / hedgehog / echidna*

So I will say nothing. >>[He has got it all wrong again!]<<

Best Wishes
Paper Tiger

[K1W1G0LD]

nous sommes une fois de plus bien placés, je vois,
Good time to celebrate with another Milkshake I say .lol

[Snow Leopard]

nous sommes une fois de plus bien placés...

You are warned I understand several languages and French is one of them.

Best Wishes
Paper Tiger

[clip]

'you people have been a lot of places, i see' or something?
You are warned I understand 1 language fluently and French is not it
/edit I get it now.. bahaha

[vorno]

nous sommes une fois de plus bien placés, je vois,

Oh well done sir!

[goldfish]

This price seems to be stuck at the moment it fluctuates between 85-87, needs a kick along. Giddyup. I know im impatient what can i say.

[blobbles]

This price seems to be stuck at the moment it fluctuates between 85-87, needs a kick along. Giddyup. I know im impatient what can i say.

Enjoy it while you can goldfish.

By enjoying it, I mean buy as many as you can! Because when the SP goes up you will be kicking yourself for not getting more now

Then you will ensure 越来越好立场.

[goldfish]

Enjoy it while you can goldfish.

By enjoying it, I mean buy as many as you can! Because when the SP goes up you will be kicking yourself for not getting more now

Then you will ensure 越来越好立场.

Im very confident it will to, i would just like it to move faster.
I thought it was going in a small uptrend again but it stopped at 87 a week ago, and back to normal fluctuations now.