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  1. #7501
    Reincarnated Panthera Snow Leopard's Avatar
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    Cool Sometimes I think you do it delibrately

    Quote Originally Posted by Snoopy View Post
    What you are telling me is part of the picture PT. But no bank would be foolish enough to run their actual loan to equity ratio as low as the minimum reserve bank requirements. Otherwise a customer like young Percy could go into Heartland to withdraw $100 to buy a bunch of flowers for his good wife. But he would be kept waiting until Joe Driver from the coin arcade, puts in the morning coin take to make the balancing $100 deposit required to avoid tipping Heartland into administration!

    The question is, what level of buffer over and above the reserve bank requirements do management regard as acceptable? ...
    Very droll Snoopy, very droll.

    No - what I meant was if you look at the latest half year disclosure statement and beagle 19(j) you will see that they sat on 14.46% (as opposed to the not totally comparable 13.76% a year earlier). They seem to like to hang around that sort of value.

    Perhaps for our readers out there we ought to spell out what a couple of the various minimum ratios practically mean.

    Whilst the Total Capital Ratio (or TCR) is above 10.5% then from the New Zealand Reserve Bank's perspective it is a case of 'No Worries'.

    Should the TCR drop below 10.5% but be above 8.0% then HBL must
    "limit the aggregate distributions of the bank’s earnings to the percentage limit to distributions that corresponds to the banking groups buffer ratio"
    i.e. reduce dividends etc to a maximum of 60%, 40%, 20% and then 0% of earnings as the 8.0% threshold is approached.

    But even below 8.0% TCR HBL is still not a bust but would be required to do some recapitalisation - tout suite (that's French for pronto).

    Having said all that if they get anywhere near 10.5% then you will see this Tiger leaving by the nearest exit.

    Best Wishes
    Paper Tiger
    om mani peme hum

  2. #7502
    ... malus's Avatar
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    Having said all that if they get anywhere near 10.5% then you will see this Tiger leaving by the nearest exit.


    ... so in the words of another immortal cat that would be "exit stage left" I presume!!
    https://youtu.be/Q3-a4qWCtIg
    Last edited by malus; 17-05-2016 at 06:53 PM.

  3. #7503
    percy
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    Quote Originally Posted by percy View Post
    So HBL have $64.1mil of "surplus capital" on the books.
    I am not surprised,as they said they had "surplus capital."
    Yet all the Australian Banks have been raising capital.
    Big difference,
    I think the reason HBL's balance sheet and equity ratios are so strong is because the directors/management have such large shareholdings.
    The "owners" eye" is certainly proved here.
    This together with having to report quarterly to The Reserve Bank of NZ ,adds an extra level of security for both depositors/customers and shareholders.

  4. #7504
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    Quote Originally Posted by percy View Post
    I think the reason HBL's balance sheet and equity ratios are so strong is because the directors/management have such large shareholdings.
    The "owners" eye" is certainly proved here.
    This together with having to report quarterly to The Reserve Bank of NZ ,adds an extra level of security for both depositors/customers and shareholders.
    Good to know especially given dairy farm sale price has fallen 24% in the past year (excluding any Mortg. and forced sales) and that particular process is really yet to start! Still see more financial distress in the wider rural services sector. How much has HBL portfolio in this wider sector??

  5. #7505
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    Default The Heartland Home Equity Release Riddle

    Quote Originally Posted by Snoopy View Post
    Refer to the interim report of FY2016 for the latest audited Heartland information. Time has rolled on and the total loan portfolio at the latest balance date (31-12-2015) was: $2,928.621m (Interim Statement of Financial Position)

    Home equity release loans, which apparently have separate capital requirements total $422.706m (note 18c).

    So the loan portfolio, less home equity release loans, was:

    $2,928.621m - $422.706m = $2,505.915m
    Before I get hauled up by a real accountant for the above....

    This home equity release stuff still does my head in. Normally with a loan as a bank customer, the customer/bank timeline goes like this.

    1/ You want stuff.
    2/ The bank lends you the money to buy the stuff.
    3/ You pay the bank their money back + interest with regular payments.

    With HER there is a different sequence of events.

    1/ You have stuff, but you want money.
    2/ You give a promise of stuff (a claim on your house) to the bank, they give you money.
    3/ The bank takes your stuff in proportion to the money that you have taken from them, plus interest.

    So technically a HER loan is not a loan in customer terms (financial receivable in bank terms). Because as soon as the bank hands you money they simultaneously gain title to an equivalent amount of offsetting stuff.

    However, if you look at how the accounts really work, (Note 43, AR2014) you will see that all the money that the 'rich bank' has to give to you, the homeowner, they don't actually have. Heartland are borrowing the home equity release money from another bank. So perversely, both you and Heartland Bank simultaneously become more indebted when you take out a home equity release loan!

    Thus, even though my above treatment of a HER loan as an account receivable looks odd, I believe my treatment of HER loans as 'financial receivables' for Heartland is justified. Because Heartland structures their HER loans by borrowing the money from other banks.

    SNOOPY
    Last edited by Snoopy; 18-05-2016 at 07:56 AM.
    To be free or not to be free. That is the cash-flow question....

  6. #7506
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    https://www.nzx.com/companies/HBL/announcements/282552

    Certainly no bad news here...

    Onwards and upwards to $1.30+
    Last edited by trader_jackson; 18-05-2016 at 08:11 AM.

  7. #7507
    percy
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    Yes as expected a very sound steady result, with the increased profit to meet guidance.
    One test I use to see whether a profit is real or not is to compare the tax a company is paying.No lies there.!
    Well HBL's tax paid is up 21% from $12,743,000 to $15,445,000.
    Equity ratio.Total assets of $3,389,000 are supported by total equity of $486,004 which is 14,34%
    We remain "well positioned'.

  8. #7508
    Reincarnated Panthera Snow Leopard's Avatar
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    Exclamation >> Third Quarter Disclosure Statement out - Heartland Not Bust Yet...

    Quote Originally Posted by Snoopy View Post
    Before I get hauled up by a real accountant for the above....

    This home equity release stuff still does my head in. Normally with a loan as a bank customer, the customer/bank timeline goes like this.

    1/ You want stuff.
    2/ The bank lends you the money to buy the stuff.
    3/ You pay the bank their money back + interest with regular payments.

    With HER there is a different sequence of events.

    1/ You have stuff, but you want money.
    2/ You give a promise of stuff (a claim on your house) to the bank, they give you money.
    3/ The bank takes your stuff in proportion to the money that you have taken from them, plus interest.

    So technically a HER loan is not a loan in customer terms (financial receivable in bank terms). Because as soon as the bank hands you money they simultaneously gain title to an equivalent amount of offsetting stuff.

    However, if you look at how the accounts really work, (Note 43, AR2014) you will see that all the money that the 'rich bank' has to give to you, the homeowner, they don't actually have. Heartland are borrowing the home equity release money from another bank. So perversely, both you and Heartland Bank simultaneously become more indebted when you take out a home equity release loan!

    Thus, even though my above treatment of a HER loan as an account receivable looks odd, I believe my treatment of HER loans as 'financial receivables' for Heartland is justified. Because Heartland structures their HER loans by borrowing the money from other banks.

    SNOOPY
    Snoopy you must read & understand this >> Money Creation in the Real Economy <<

    Your two 'different' scenarios are no different on the balance sheet.

    Best Wishes
    Paper Tiger
    om mani peme hum

  9. #7509
    Reincarnated Panthera Snow Leopard's Avatar
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    Unhappy Drink more milk, eat more cheese, and top your cereal with lots of yoghurt*

    Position of Rural (includes Dairy) Loans for last 4 quarters:



    Obviously it is not getting better yet.

    There is more to the total picture across all sectors (i.e. another $9,284 of individually impaired assets) so read the DS if you are really interested but Rural is currently the 'biggy'.

    Best Wishes
    Paper Tiger

    Consult your doctor as to whether a high dairy diet is good for you.
    om mani peme hum

  10. #7510
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    My mate Cam with good news

    @ANZ_cambagrie: ANZ consumer confidence eased 4 points in May but remains elevated at 116.2. Expectations of house price growth hit a new high.


    Happy consumers / increased wealth effect leads to more consumer borrowing - hope Heartland gets more than its fair share of this
    “In a roaring bull market, knowledge is superfluous and experience is a handicap.”

    –Benjamin Graham”

  11. #7511
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    Several hundreds of thousands of buy orders rolling in for Heartland today I've noticed, with a few hundred thousand reluctant sellers

    Not to many NZX 50 stocks offering 10%+ gross dividend that is for sure...

    Forsyth update: Expecting profit to come in at $54m (top end of guidance) with a target share price of $1.35

  12. #7512
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    Has anybody got access to INTEREST.CO.NZ website as their is a story on their regarding how HEARTLAND would purchase any new purchase,such as UDC.
    Also they mention that the REVERSE MORTGAGE book is picking up.
    Theses stories are available to subscribers only.

  13. #7513
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    Quote Originally Posted by Paper Tiger View Post
    Position of Rural (includes Dairy) Loans for last 4 quarters:



    Obviously it is not getting better yet.

    There is more to the total picture across all sectors (i.e. another $9,284 of individually impaired assets) so read the DS if you are really interested but Rural is currently the 'biggy'.

    Best Wishes
    Paper Tiger

    Consult your doctor as to whether a high dairy diet is good for you.
    Thanks PT, the board falls silent on it....

  14. #7514
    percy
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    Quote Originally Posted by Paper Tiger View Post
    Position of Rural (includes Dairy) Loans for last 4 quarters:



    Obviously it is not getting better yet.

    There is more to the total picture across all sectors (i.e. another $9,284 of individually impaired assets) so read the DS if you are really interested but Rural is currently the 'biggy'.

    Best Wishes
    Paper Tiger

    Consult your doctor as to whether a high dairy diet is good for you.
    Paper Tiger.
    Not sure you are correct.
    It appears I along with two major brokerage houses, whose updated research I read yesterday, do not see what you are seeing.
    Both research papers noted the very small % increase in impairements,although one research paper expected the final quarters will be the one to watch.
    Both research papers had HBL as a buy,one with a target price of $1.30 ,the other $1.34.
    Both were most impressed with HBL's margin and control of costs.

  15. #7515
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    Quote Originally Posted by percy View Post
    Paper Tiger.
    Not sure you are correct.
    It appears I along with two major brokerage houses, whose updated research I read yesterday, do not see what you are seeing.
    Both research papers noted the very small % increase in impairements,although one research paper expected the final quarters will be the one to watch.
    Both research papers had HBL as a buy,one with a target price of $1.30 ,the other $1.34.
    Both were most impressed with HBL's margin and control of costs.
    Extend and pretend..don't worry the Government helped pump it up and will try to hold it up..election next year:-)

    http://www.stuff.co.nz/business/farm...t-not-for-sale

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