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  1. #10321
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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.

  2. #10322
    percy
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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.

  3. #10323
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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 01:44 PM.

  4. #10324
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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.

  5. #10325
    percy
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    ANZ today informed the market ;
    "UDC sale to HNA not proceeding"
    Last edited by percy; 12-01-2018 at 04:11 PM.

  6. #10326
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    Yes heard that on CNBC, tantalising thoughts/dreams on the HBL thread ehh

  7. #10327
    percy
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    We are well positioned to live in interesting times.?...lol.

  8. #10328
    Senior Member Marilyn Munroe's Avatar
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    There is an article on the interest.co.nz website speculating on whether Heartland will make bid for UDC Finance.

    The article suggests Heartland will have trouble digesting an outfit the size of UDC if ANZ do not leave some vendor finance in or there is a lack of support by UDC debenture holders.

    https://www.interest.co.nz/opinion/9...en-now-quickly

    Boop boop de do
    Marilyn
    Diamonds are a girls best friend.

  9. #10329
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    Quote Originally Posted by percy View Post
    Funding.Would be a "game" changer for both,and intos would want on board.The sp would head north straight away [over $2.50], and a "huge" rights issue would be well supported.HBL would need to raise about 72 cents per share.ie approx. $400mil.
    HBL would most probably need ANZ's support for a year or so, to give them time to get bond depositors onboard.
    UDC bond depositors who left because of their worries about HNA, would most probably support HBL as a NZ bank owning UDC.
    I posted the above on 22-12-2017.

  10. #10330
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    If Vodafone is contemplating a float on the N Z market why not UDC as well ?

  11. #10331
    percy
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    Quote Originally Posted by whatsup View Post
    If Vodafone is contemplating a float on the N Z market why not UDC as well ?
    ANZ have tended to go with trade sales with their non- core assets.
    That said,a UDC a float would be well supported.

  12. #10332
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    https://www.interest.co.nz/opinion/9...en-now-quickly

    Another capital raise for Heartland coming ?

  13. #10333
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    Quote Originally Posted by Beagle View Post
    https://www.interest.co.nz/opinion/9...en-now-quickly

    Another capital raise for Heartland coming ?
    Well, it would need to be a big one if it's to fund a purchase of UDC. According to David Hargreaves, ANZ has $2b funding UDC - which a new owner would need to find from somewhere.

  14. #10334
    percy
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    Quote Originally Posted by Beagle View Post
    https://www.interest.co.nz/opinion/9...en-now-quickly

    Another capital raise for Heartland coming ?
    Thanks for again posting the link.
    MM post #10328

  15. #10335
    percy
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    Quote Originally Posted by macduffy View Post
    Well, it would need to be a big one if it's to fund a purchase of UDC. According to David Hargreaves, ANZ has $2b funding UDC - which a new owner would need to find from somewhere.
    I have already posted my thoughts,posts # 10284 and #10329

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