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  1. #10306
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    I had shares in cbs so was handed shares when HBL took over.
    I have since increased my meagre shareholding only because unlike the big Aussie banks i thought that this would be my one chance to get into a bank at a resonable cost.
    Enjoyed the ride so far.

  2. #10307
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    Quote Originally Posted by percy View Post
    How so??????????????????????????????
    HBL play in niche areas and have grown small business lending significantly. These are the types of areas that will have lower take up rates and higher levels of default in the times of economic crisis. They also have a stake in the likes of Harmoney which haven't been through an economic crisis as of yet and have a lower credit rating which means their cost of credit will be higher. They also won't be able raise capital as easily in a recession and they are one of the only big banks that has chosen to come to shareholders for cash.

    The big banks in ANZ have performed fairly well in recessions and property downturns. With HBLs new model and large amounts of lending in small business, personal and reverse mortgages I see it as riskier in hard times.

  3. #10308
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    Quote Originally Posted by JeremyALD View Post
    HBL play in niche areas and have grown small business lending significantly. These are the types of areas that will have lower take up rates and higher levels of default in the times of economic crisis. They also have a stake in the likes of Harmoney which haven't been through an economic crisis as of yet and have a lower credit rating which means their cost of credit will be higher. They also won't be able raise capital as easily in a recession and they are one of the only big banks that has chosen to come to shareholders for cash.

    The big banks in ANZ have performed fairly well in recessions and property downturns. With HBLs new model and large amounts of lending in small business, personal and reverse mortgages I see it as riskier in hard times.
    Thanks for your reply.

  4. #10309
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    Quote Originally Posted by JeremyALD View Post
    HBL play in niche areas and have grown small business lending significantly. These are the types of areas that will have lower take up rates and higher levels of default in the times of economic crisis. They also have a stake in the likes of Harmoney which haven't been through an economic crisis as of yet and have a lower credit rating which means their cost of credit will be higher. They also won't be able raise capital as easily in a recession and they are one of the only big banks that has chosen to come to shareholders for cash.

    The big banks in ANZ have performed fairly well in recessions and property downturns. With HBLs new model and large amounts of lending in small business, personal and reverse mortgages I see it as riskier in hard times.
    I’m probably wrong but my understanding of Harmoney is that they don’t actually lend their own money but act as a facilitator for others to lend money through their platform. Harmoney clip the ticket on the way through?
    SCOTTY

  5. #10310
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    Quote Originally Posted by SCOTTY View Post
    I’m probably wrong but my understanding of Harmoney is that they don’t actually lend their own money but act as a facilitator for others to lend money through their platform. Harmoney clip the ticket on the way through?
    But as I understand it Heartland are also one of the "others" you refer to.

  6. #10311
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    My understanding is that HBL have in fact funded a substantial amount of the lending that's happened on the Harmony platform and that all the lending is unsecured. I believe it runs to many tens of millions of dollars but Percy might know more about it, could be closer to $100m by now ? Like Jeremy I wonder about the default rate of this sort of lending if the economy ever goes pear shaped, ditto small business lending and dairy lending if there's another crisis in that sector which is already affected by farmers carrying much higher than normal level's of legacy debt from the last dairy crisis. March 2018 marks the nine year anniversary of the great bull market. I'd like to think there's a tenth year in this great bull market and maybe even an eleventh ?... but time will tell, we must get another recession sooner or later.
    No butts, hold no mutts, (unless they're the furry variety).

  7. #10312
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    Quote Originally Posted by Beagle View Post
    My understanding is that HBL have in fact funded a substantial amount of the lending that's happened on the Harmony platform and that all the lending is unsecured. I believe it runs to many tens of millions of dollars but Percy might know more about it, could be closer to $100m by now ? Like Jeremy I wonder about the default rate of this sort of lending if the economy ever goes pear shaped, ditto small business lending and dairy lending if there's another crisis in that sector which is already affected by farmers carrying much higher than normal level's of legacy debt from the last dairy crisis. March 2018 marks the nine year anniversary of the great bull market. I'd like to think there's a tenth year in this great bull market and maybe even an eleventh ?... but time will tell, we must get another recession sooner or later.
    Yes Heartland own 10% of Harmony.Yes Heartland appear to have first pick of the loans.Yes Heartland have lent approx. $30mil via Harmony.Yes Heartland are more than happy with the arrangement.
    Secured lending.All lending carries risk.With secured lending the asset borrowed against may not realise the full value of the loan.
    Unsecured lending.Lenders will check the borrower's credit history,and financial and personnel details very carefully.
    We can argue all we like,however the likes of HBL and TRA have extremely low default rates.
    Talking to Heartland I have learnt the following.
    Yes you could drive out of the dealer's yard with a new Holden, with no deposit.However you would need to have one of the best credit ratings in NZ.The promotion was to get customers into the Holden dealers.Most people wanted to trade their car in,and did not want a huge finance package.A successful promotion.
    Open for business.Open for etc.The take up has been excellent.More products,and even trialling some products in Australia.So far defaults are well below budget.Small business owners rely solely on their business for their livelihood,Borrowings are used in their businesses,to produce profits.
    Reverse Equity Mortgages.Good security and higher interest charged.Heartland hold a very small portfolio of residential mortgages, other than RELs.
    Niche lending.Heartland have stayed away from competing with the Aussie banks.Heartland's expertise in niche lending has helped Heartland to achieve the highest net interest margin.Very profitable lending adds to the overall strength of Heartland.
    Cost of funds.Heartland do not use European wholesale funding.Heartland have proved investors support them via capital raisings,bonds and general deposits,both term and on call.
    The Reserve Bank of NZ's outlook is positive for NZ,so the doomsters will have to wait a few years.In the meantime I will continue to enjoy growing fully imputasted divies,because I remain well positioned.
    Last edited by percy; 06-01-2018 at 07:43 PM.

  8. #10313
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    Quote Originally Posted by percy View Post
    Yes Heartland own 10% of Harmony.Yes Heartland appear to have first pick of the loans.Yes Heartland have lent approx. $30mil via Harmony.Yes Heartland are more than happy with the arrangement.
    Minor quibble, but I believe both the shareholding and amount lent is larger than this

    "Harmoney has Heartland Bank as a 12.9% shareholder. Heartland also lends money through Harmoney, and as of June 30 had lent $78 million through the P2P lender. A Heartland spokeswoman says this has continued to grow since, and Heartland’s lending through Harmoney represents around one-third of the Harmoney loan book."

    Between Heartland, TSB, and other institutional investors, approx. 75% of Harmoney's funding is wholesale.

    https://www.interest.co.nz/opinion/9...-fund-managers

    Whether this poses a risk to Heartland I couldn't say, but I sold out at about 1.80 as I felt the price was getting a little rich. Is it purely being bumped up by speculation regarding UDC now the planned sale has fallen through?

  9. #10314
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    Quote Originally Posted by mfd View Post
    Minor quibble, but I believe both the shareholding and amount lent is larger than this

    "Harmoney has Heartland Bank as a 12.9% shareholder. Heartland also lends money through Harmoney, and as of June 30 had lent $78 million through the P2P lender. A Heartland spokeswoman says this has continued to grow since, and Heartland’s lending through Harmoney represents around one-third of the Harmoney loan book."

    Between Heartland, TSB, and other institutional investors, approx. 75% of Harmoney's funding is wholesale.

    https://www.interest.co.nz/opinion/9...-fund-managers

    Whether this poses a risk to Heartland I couldn't say, but I sold out at about 1.80 as I felt the price was getting a little rich. Is it purely being bumped up by speculation regarding UDC now the planned sale has fallen through?
    Thank you for the link.
    I could not find where I had filed the facts, and quoted from "failing" memory.
    A good profitable channel for Heartland,and TSB.
    Last edited by percy; 06-01-2018 at 08:17 PM.

  10. #10315
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    Quote Originally Posted by percy View Post
    Yes Heartland own 10% of Harmony.Yes Heartland appear to have first pick of the loans.Yes Heartland have lent approx. $30mil via Harmony.Yes Heartland are more than happy with the arrangement.
    Secured lending.All lending carries risk.With secured lending the asset borrowed against may not realise the full value of the loan.
    Unsecured lending.Lenders will check the borrower's credit history,and financial and personnel details very carefully.
    We can argue all we like,however the likes of HBL and TRA have extremely low default rates.
    Talking to Heartland I have learnt the following.
    Yes you could drive out of the dealer's yard with a new Holden, with no deposit.However you would need to have one of the best credit ratings in NZ.The promotion was to get customers into the Holden dealers.Most people wanted to trade their car in,and did not want a huge finance package.A successful promotion.
    Open for business.Open for etc.The take up has been excellent.More products,and even trialling some products in Australia.So far defaults are well below budget.Small business owners rely solely on their business for their livelihood,Borrowings are used in their businesses,to produce profits.
    Reverse Equity Mortgages.Good security and higher interest charged.Heartland hold a very small portfolio of residential mortgages, other than RELs.
    Niche lending.Heartland have stayed away from competing with the Aussie banks.Heartland's expertise in niche lending has helped Heartland to achieve the highest net interest margin.Very profitable lending adds to the overall strength of Heartland.
    Cost of funds.Heartland do not use European wholesale funding.Heartland have proved investors support them via capital raisings,bonds and general deposits,both term and on call.
    The Reserve Bank of NZ's outlook is positive for NZ,so the doomsters will have to wait a few years.In the meantime I will continue to enjoy growing fully imputasted divies,because I remain well positioned.
    Thank you for this Percy, even though as mfd has pointed out the numbers about Harmoney may be a little higher. The main point is that HBL has consistently achieved higher interest margins than other banks and defaults have consistently been very low. As you pointed out, people tend to continue paying their car finance as they need their car and in the event of them not continuing payments, default amounts are normally quite low.

    HBL also continues as recently proved to be well supported for funding from shareholders and do not hold large amounts in the risky home mortgage business, which I "astutely note" will suffer much more in any economic crisis than the niche lending HBL does.
    Yes HBL is "fully priced" on historical earnings as has often been discussed on this platform over the years, but it is worth reminding that nobody on here foresaw their forays into reverse mortgages or P2P lending the way they have done. This includes becoming one of the largest players in reverse mortgages in Australia. I believe this lending will continue to grow significantly, particularly in any economic crisis where older generations (i.e. Beagle) may help the younger generations (i.e. Beagle's daughters) using such tools.

  11. #10316
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    Quote Originally Posted by iceman View Post
    Thank you for this Percy, even though as mfd has pointed out the numbers about Harmoney may be a little higher. The main point is that HBL has consistently achieved higher interest margins than other banks and defaults have consistently been very low. As you pointed out, people tend to continue paying their car finance as they need their car and in the event of them not continuing payments, default amounts are normally quite low.

    HBL also continues as recently proved to be well supported for funding from shareholders and do not hold large amounts in the risky home mortgage business, which I "astutely note" will suffer much more in any economic crisis than the niche lending HBL does.
    Yes HBL is "fully priced" on historical earnings as has often been discussed on this platform over the years, but it is worth reminding that nobody on here foresaw their forays into reverse mortgages or P2P lending the way they have done. This includes becoming one of the largest players in reverse mortgages in Australia. I believe this lending will continue to grow significantly, particularly in any economic crisis where older generations (i.e. Beagle) may help the younger generations (i.e. Beagle's daughters) using such tools.
    Unfortunately Heartland can't compete with "The Bank of Dad" which continues to offer interest free,non repayable loans..lol.

  12. #10317
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by iceman View Post
    Thank you for this Percy, even though as mfd has pointed out the numbers about Harmoney may be a little higher. The main point is that HBL has consistently achieved higher interest margins than other banks and defaults have consistently been very low. As you pointed out, people tend to continue paying their car finance as they need their car and in the event of them not continuing payments, default amounts are normally quite low.

    HBL also continues as recently proved to be well supported for funding from shareholders and do not hold large amounts in the risky home mortgage business, which I "astutely note" will suffer much more in any economic crisis than the niche lending HBL does.
    Yes HBL is "fully priced" on historical earnings as has often been discussed on this platform over the years, but it is worth reminding that nobody on here foresaw their forays into reverse mortgages or P2P lending the way they have done. This includes becoming one of the largest players in reverse mortgages in Australia. I believe this lending will continue to grow significantly, particularly in any economic crisis where older generations(i.e. Beagle) may help the younger generations (i.e. Beagle's daughters) using such tools.
    A few thoughts mate. If lending to Harmoney was $78m as at 30 June 2017 then I think its safe to say its well on it's way to $100m or possibly more by now, perhaps at least three times Percy's suggestion which is of course factually a lot more not a little.
    Default rates have been consistently low because the economy has been consistently good since the GFC. Default rates would change substantially if another GFC eventuated most especially for unsecured lending.
    I disagree about your assertion that lending to small and medium business and unsecured would have lower default rates than standard housing lending in another recession and believe the GFC provided ample evidence of that. Bottom line when people are made redundant en-masse they have no chance of their motor vehicle, personal or business lending being bailed out by their benefit or the Government whereas on the other hand people often get assistance through the accommodation supplement paid in addition to their unemployment benefit to pay their housing costs.
    I'm not sure how many older folks would borrow on a reverse equity credit facility to help their kids get into debt on a mortgage but I certainly wouldn't.

    As mentioned yesterday I think the PE re-rating thing has run its course and on a forward PE of 17 v a sector average of just on 13 this now looks quite stretched. Yes its a good company and there's good organic growth and that's now fully priced in, in my opinion. The undisputed fact is HBL's credit rating is well below the major trading banks so the credit ratings agencies think its more vulnerable in the event of a major economic downturn or major exogenous shock.

    For me its all about maximizing returns and minimizing risks. After a ~ 50% gain last year I think the chances of HBL outperforming the index this year are extremely slim. I guess I have turned into someone who's chasing outperformance and am prepared to sell shares after a period of substantial outperformance when I assess the chances of further market outperformance in the ensuing year are very slim. The problem with owning shares that have given you a 50% return in any one year is one tends to want to look for the next big thing that will do that the following year Disc Sold HBL in Dec 2017 at $2.14 and used to the proceeds to invest further into HLG at $3.50.
    Last edited by Beagle; 07-01-2018 at 12:44 PM.
    No butts, hold no mutts, (unless they're the furry variety).

  13. #10318
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    Consensus is the NZ stocks performing ok this year in a Goldilocks kinda way. And black swan events not withstanding the investment climate looks low risk and stable imo. Last few years have been exceptional. Realistically few will outperform this year. Hard to find value on the NZX and expected growth built in already to the s/p of many. Agree ,reverse mortgages a real grower.
    I think comparing HBL to the big Aus banks is a waste of time, apples with oranges. Holding but watching all my stocks that have run up ,closely. And where to put the funds if one sells a quality stock like this? Not m/any choices esp in this sector atm.

  14. #10319
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    ANZ today informed the market ;
    "UDC sale to HNA not proceeding"
    Last edited by percy; 12-01-2018 at 03:11 PM.

  15. #10320
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    Yes heard that on CNBC, tantalising thoughts/dreams on the HBL thread ehh

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