HGH - Heartland Group Holdings

[Snoopy]

Just been looking at the latest (FY2011) ANZ annual report Percy.

The balance sheet on page 88 shows net assets of $37.954m. Net loans and advances are listed on the same page $396.337m. So I get an equity to loan ratio of:

$37.954m/$396.337m= 9.58%

ROE based on end of year equity was

$5.873m/$37.954= 15.5%

Of course the true ROE figure uses the average equity over the year

Just been looking at the latest (FY2012) ANZ annual report. With Heartland now a bank, it is always good to look over your shoulder and see what the competition are doing.

The balance sheet on page 74 shows net assets of $41.220m. Net loans and advances are listed on the same page $427.823m. So I get an equity to loan ratio of:

$41.220m/$427.823m= 9.63%

ROE based on end of year equity was

$5.661m/$41.220m= 13.7%

Of course the true ROE figure uses the average equity over the year. But for ease and consistency of calculation, this is the way I like to do things.

Return on equity seems to be slowing as a result of tougher conditions in the whole banking sector. So maybe that cash issue to shore up the Heartland balance sheet is a bit closer?

SNOOPY

[Snoopy]

Originally Posted by percy
"Start worrying about Aussie banks sauces of funds.They appear to have a problem."

Taking ANZ as an example Percy, I don't believe the picture is as bad as you paint it. Take a look at the latest 30th September 2011 Balance Sheet. There is an item on there called 'bonds and notes' that is unrelated to any shareholders equity that ANZ may have built up. It accounts for $56.551m which when added to the $37.954m of shareholders equity must make ANZs 'total loan capital' to 'loans outstanding' rather superior to Heartland's position.

An update on the position in Australia that Percy in particular is very concerned about: Bonds and Notes (see Note 27) have increased to $63,098m. Add that to shareholders equity of $41,220m and total available capital to ANZ is now $104,318m. That is a 10% increase on the $95,404m available at the end of the previous financial year. The Aussie crisis is receding!

If you regard the bonds and notes as 'quasi-capital', then ROE for ANZ drops to:

$5.661m/ $104.318m = 5.4%

Realistically, IMO, this is the kind of return you should be looking at as the long term potential of Heartland Bank.

Heartland bank had equity of $343.7m at last balance date. So assuming all of that equity can be worked we are looking at a long term profit potential of:

0.054 x $343.7m = $18.6m

So Heartland are overperforming the benchmark by quite a long way in FY2012, with a $23.6m profit. Of course with a bit more shareholder capital, perhaps $23.6m is sustainable long term?

SNOOPY

[percy]

Just been looking at the latest (FY2012) ANZ annual report. With Heartland now a bank, it is always good to look over your shoulder and see what the competition are doing.

The balance sheet on page 74 shows net assets of $41.220m. Net loans and advances are listed on the same page $427.823m. So I get an equity to loan ratio of:

$41.220m/$427.823m= 9.63%

ROE based on end of year equity was

$5.661m/$41.220= 13.7%

Of course the true ROE figure uses the average equity over the year. But for ease and consistency of calculation, this is the way I like to do things.

Return on equity seems to be slowing as a result of tougher conditions in the whole banking sector. So maybe that cash issue to shore up the Heartland balance sheet is a bit closer?

SNOOPY

I would be happy if/when HNZ achieved ANZ's 13.7% ROE,while I expect you would be a happy if/when ANZ achieved HNZ 16% equity ratio.

[Snoopy]

The best interest rate link from the sharechat website puts me through to: http://www.depositrates.co.nz/

Heartland has a call rate of 3.75%, a 90 day rate of 4.5% and a 12 month rate of 5%. These are of course leading rates that apply to new term deposits and those that are rolling over. Customers can get higher call rates at BNZ and ANZ/National. Heartland are higher than the best of the big banks (Westpac by 0.5%) on a 3 month term. Heartland are 0.5% higher than the best of the big banks (BNZ) on a 12 month term.

Come a banking licence and how the Heartland rates have changed from September 2012: Call rate 4.0% (+0.25%), 90 days 4.2% (-0.3%) and 12 months 4.55% (-0.45%). The best of the big four banks (actually all of them) now offers 3.25% for 90 days.

So the Heartland risk margin over 90 days is now:

4.2% - 3.25%= 0.95%

On a one year basis Westpac and BNZ offer the best depositor rates at 4.2%

So the Heartland risk margin over 12 months is now:

4.55%-4.2% = 0.35%

The 12 month margin is trimmed there from 0.5% 'pre-bank'.

That means Heartland are competing more vigorously for depositors funds at the shorter end. Trying to grab market share? Good for growth. Maybe not so good for profit margins?

SNOOPY

[winner69]

Snoopy .... for most periods >12 months Heartland term deposit rates are currently very attractive .... .3% to 0.5% more than Rabo or Cooperative BANK

Some Cooperative money due to be reinvested soon .... might have to go to Heartland ..... but would hate to as the reason for coopaerative is around the social conscience side of me ..... hate seeing greedy shareholders making dosh on my dosh

Conclusion - Heartland trying to attract deposits with very attractive rates? Good eh or is it bad? Or did they really work out that Cooperative BANK was doing better than they were at attracting money?

[percy]

Snoopy .... for most periods >12 months Heartland term deposit rates are currently very attractive .... .3% to 0.5% more than Rabo or Cooperative BANK

Some Cooperative money due to be reinvested soon .... might have to go to Heartland ..... but would hate to as the reason for coopaerative is around the social conscience side of me ..... hate seeing greedy shareholders making dosh on my dosh

Conclusion - Heartland trying to attract deposits with very attractive rates? Good eh or is it bad? Or did they really work out that Cooperative BANK was doing better than they were at attracting money?

Just remember you are better owning a bank,than having money in the bank.

[garfy]

I do like winner69's sentiments, but is he is talking to the wrong forum? ..... this is about money and making it work.

I'm on Percy's side, probably less for myself than for my grandchildren

[winner69]

I do like winner69's sentiments, but is he is talking to the wrong forum? ..... this is about money and making it work.

I'm on Percy's side, probably less for myself than for my grandchildren

Mr garfy - some of us don't have all our money 'working' in the share market all the time ..... and the comments are relevant to this forum and thread in that they supported snoopy's little analysis in that heartland probably/may be buying business and it may be hurting their margins short term ..... or even worse that Cooperative Bank might be doing better than them

Agree percy better you own the bank than having money in it (over the long term) but just like you percy some of our money is 'in' the bank isn't it

Some could say that other BANK gives you the best of both worlds - having money 'in' it as well as owning it (though I have yet to work out what you get from 'owning' it yet)

Jeez - twice in a few weeks I have been told off . castigated by fellow posters for putting things in the wrong forum .... either the world is going stupid or there has been too many full moons. About time for some more raves about Occupy and what we should be doing to cut greedy bankers and shareholders down to size

[percy]

Good bit of advice from 12 to 14 year olds St.Agnes School,via Peter Lynch in Brian Gaynor article in this morning's Herald.
"Investors should look at small companies,because as a group they tend to out perform the larger ones over the longer term."
We should remember their advice when comparing Heartland with ANZ and Westpac.
ps.Brian Gaynor article well worth the read.

[percy]

Mr garfy - some of us don't have all our money 'working' in the share market all the time ..... and the comments are relevant to this forum and thread in that they supported snoopy's little analysis in that heartland probably/may be buying business and it may be hurting their margins short term ..... or even worse that Cooperative Bank might be doing better than them

Agree percy better you own the bank than having money in it (over the long term) but just like you percy some of our money is 'in' the bank isn't it

Some could say that other BANK gives you the best of both worlds - having money 'in' it as well as owning it (though I have yet to work out what you get from 'owning' it yet)

Jeez - twice in a few weeks I have been told off . castigated by fellow posters for putting things in the wrong forum .... either the world is going stupid or there has been too many full moons. About time for some more raves about Occupy and what we should be doing to cut greedy bankers and shareholders down to size

Next full moon you should go to the Vatican and tell the Pope there is no God.!!!!!! lol.
Wouldn't mention your Co_Op idea for the Vatican Bank .They got into enough trouble on their own!!!!
No greedy sharehoders here,only nice people wanting to improve their knowledge about listed company shares,so as they may become more successful at investing.