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27-02-2014, 12:57 PM
#2781
Better Heartland than other banks
Originally Posted by Snoopy
Once again there is no mention of Tier 1 or Tier 2 in the Heartland HY2013 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 $2,076.968m = $415.4m
Heartland has total equity of $382.5m which is still below the 20% of loan target no matter what the tier classification of the loans.
Result: FAIL TEST
PS I do note that while other posters have protested at my 20% of equity to back up the loan measuring stick in the past, it is not too far away from the 17% which by implication is judged acceptable by management under the watchful eye of Reserve Bank chairman Graeme Wheeler. The reserve bank further qualifies their views that a company of Heartlands credit rating still has a 1 in 30 chance of going broke in any year. I prefer to think in business cycles and 30 years will contain around five of those. So you could restate the Reserve Bank's view as saying that HNZ has a one in five chance of going broke at the bottom of the business cycle. For me that investment risk is too high. So I am sticking to my 20% equity requirement, even if the Reserve Bank will settle for less.
So let us apply this metric of yours to a couple of other financial institutions:
The Heartland figures of $2,076.968 are Liabilities: Borrowings and the $382.5 is total equity (including intangibles )
ANZ: (Dec-13 Disclosure Statement)
Interest and discount bearing liabilities: $93,757M
Required equity for 20% ratio: $18,751M
Total equity: $11,832M, Ratio only: 12.6%
Westpac: (Dec-13 Disclosure Staement)
Interest and discount bearing liabilities: $61,261M
Required equity for 20% ratio: $12,252M
Total equity: $6,439M, Ratio only: 10.5%
Best Wishes
Paper Tiger
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27-02-2014, 01:22 PM
#2782
As well as the better equity ratio, Heartland shareholders get to enjoy imputated divies.
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27-02-2014, 01:27 PM
#2783
Hi percy seems your pearly whites are gleaming. Im looking ahead and i can see a sideways movement in the s/p for a while. Be great if Heartland can refresh the reverse annuity model so the oldies see it as a viable option in future. Always are surprises but my shallow gaze doesn't see many other catalysts on the immediate horizon but steady as she goes. cheers JT
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27-02-2014, 01:32 PM
#2784
Member
Originally Posted by winner69
Jeff was on the radio yesterday and said the NZ economy isn't as strong as most make out ...good in pockets but not that good in other areas...
Yeah there have been unheard hints of another collapse but as to when is difficult to measure. We're currently sitting (overall) at a very high & strong level as I understand it, so it only makes sense that this "hype" will correct itself at some stage.
...Probably 5-10 years away according to an article I read a while back, however they admitted that it could be a lot longer!
Opinions?
Last edited by vorno; 27-02-2014 at 01:34 PM.
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27-02-2014, 01:33 PM
#2785
Originally Posted by Paper Tiger
So let us apply this metric of yours to a couple of other financial institutions:
The Heartland figures of $2,076.968 are Liabilities: Borrowings and the $382.5 is total equity (including intangibles )
ANZ: (Dec-13 Disclosure Statement)
Interest and discount bearing liabilities: $93,757M
Required equity for 20% ratio: $18,751M
Total equity: $11,832M, Ratio only: 12.6%
Westpac: (Dec-13 Disclosure Staement)
Interest and discount bearing liabilities: $61,261M
Required equity for 20% ratio: $12,252M
Total equity: $6,439M, Ratio only: 10.5%
Best Wishes
Paper Tiger
Fair call PT, but not quite a fair comparison. Both ANZ NZ and WBC NZ have different credit ratings to HNZ. And although all three banks have NZ banking licences as approved by the NZ Reserve Bank, the terms of those licences are not equal. Heartland's terms are a bit more - er- restrictive.
SNOOPY
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
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27-02-2014, 01:35 PM
#2786
Originally Posted by percy
As well as the better equity ratio, Heartland shareholders get to enjoy imputated divies.
Actually ANZ (Oz) and WBC (Oz) now partially impute their dividends too for NZ share holders. However, they are not 100% imputed dividends which of course Heartland does have.
SNOOPY
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
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27-02-2014, 01:50 PM
#2787
Just so much nicer having a fully imputed divie.!!! lol.
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27-02-2014, 02:19 PM
#2788
Fair's fair
Originally Posted by Snoopy
Fair call PT, but not quite a fair comparison. Both ANZ NZ and WBC NZ have different credit ratings to HNZ. And although all three banks have NZ banking licences as approved by the NZ Reserve Bank, the terms of those licences are not equal. Heartland's terms are a bit more - er- restrictive.
SNOOPY
So what would be a fair comparison then?
What thresholds should apply to ANZ(NZ) and Westpac(NZ), and what authority is the source of these thresholds?
Best Wishes
Paper Tiger
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27-02-2014, 02:49 PM
#2789
Originally Posted by Paper Tiger
So what would be a fair comparison then?
What thresholds should apply to ANZ(NZ) and Westpac(NZ), and what authority is the source of these thresholds?
Best Wishes
Paper Tiger
I would take the ratios you have calculated. But instead of comparing them with each other, for each one measure the 'headroom' between the actual figure and the minimum figure that the Reserve Bank of NZ requires for each specific bank under examination.
SNOOPY
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
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27-02-2014, 10:37 PM
#2790
And so to prove that you can prove what you want by using the wrong numbers
Originally Posted by Snoopy
I would take the ratios you have calculated. But instead of comparing them with each other, for each one measure the 'headroom' between the actual figure and the minimum figure that the Reserve Bank of NZ requires for each specific bank under examination.
SNOOPY
So here we go:
|
Tier1&2 a la Snoopy % |
RBNZ Requirement % |
Buffer % |
ANZ |
12.6 |
8 |
4.6 |
WBC |
10.5 |
8 |
2.5 |
HNZ |
18.4 |
12 |
6.4 |
It would seem that HNZ still wins hands down. I have just followed the calculation method and instructions of Snoopy.
Best Wishes
Paper Tiger
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