HGH - Heartland Group Holdings

[lorraina]

Firstly, cost of funds increased during the period after being -- with the cash rate being at record lows in both countries for a long period of time. We saw a rapid and sharp increase. Heartland intentionally delayed passing the full impact of these increases on to some customers and in the case of Reverse Mortgages in New Zealand and Australia did not pass on the full increases. With deposits, Heartland was quick to pass on the benefits of the rising cash rate. It is believed while this did not maximize our potential NIM, it was a socially responsible and more sustainable approach, and this has positioned Heartland to fund future receivables growth.

[Basil]

Companies that put ESG matters ahead of shareholder returns worry me.   When a company becomes "Certified B Corp" where planet and people are put on exactly the same level as shareholders its a run for the hills moment because its a slippery slope from there ...
Got another email this morning from Heartland with exactly the same message as yesterday's one, which I quoted in my last post.  With every other interest rate change I have only ever got one email...just putting that on the record, make of that what you will.

[arekaywhy]

Companies that put ESG matters ahead of shareholder returns worry me.  When a company becomes "Certified B Corp" where planet and people are put on exactly the same level as shareholders its a run for the hills moment because its a slippery slope from there ...

I agree, they are effectively saying "we are no longer interested in anything to do with merit, efficiency, or logic.  We are interested in the feels"

It's the feels that loses you money

[lorraina]

Well guys you better get used to it,as that is the way the world and companies are moving.

[Basil]

Pretty sure the guys at Turners, (my preferred finance exposure), aren't going to be spending vast sums of money and time cow-towing to the endless woke ESG compliance nonsense anytime soon.

[Untamed]

It's only a matter of time.

Pretty sure the guys at Turners, (my preferred finance exposure), aren't going to be spending vast sums of money and time cow-towing to the endless ESG compliance nonsense anytime soon.

[lorraina]

Pretty sure the guys at Turners, (my preferred finance exposure), aren't going to be spending vast sums of money and time cow-towing to the endless woke ESG compliance nonsense anytime soon.

May pay to check with Tina.?

Turners' sustainability strategy is underpinned by two key
pillars:
■ Enhancing the well-being of our staff and the
communities in which we operate.
■ Supporting and accelerating the transition of the New
Zealand light vehicle fleet to a cleaner, lower emission
future.
We have a number of initiatives already in place which you
can read about on the following pages.
Turners is at the start of its sustainability reporting journey
and we are working towards increased transparency and
measuring of our footprint.

■ Formalised Turners'
sustainability committee
■ Appointed sustainability
champions in each
business
■ Identified key
sustainability pillars
■ Initiatives undertaken
to support Turners' long
term sustainability pillars
■ Confirm approach
to Climate Related
Disclosures and develop
reporting framework
■ Identify climate related
risks and opportunities for
Turners
■ Define Scope 1 and 2
measures
■ Commence measuring
Scope 1 emissions
■ Implement external
assurance process
■ Establish KPIs for
emissions and other
material issues
■ Increase disclosure and
reporting
■ Commence measuring
Scope 2 emissions
■ Integrate management of
climate related risks and
opportunities into risk
framework
■ Continue to develop
disclosure and reporting

[winner (n)]

Lots of ESG plus bloated CEO remuneration often not a good combo .....and often leads to flat eps growth at best and dishing shareholder  returns

In F22 Greenslade got paid 23.17 times what the average employee got paid ....seems rather obscene .....and at odds with inclusivity and fairness.

But Greenslade probably deserves every penny (or more) of his pay.

[Basil]

lorraina - This is all I say about that https://www.nzonscreen.com/title/bugger-toyota-hilux-commercial-1999

[lorraina]

lorraina - This is all I say about that https://www.nzonscreen.com/title/bugger-toyota-hilux-commercial-1999

https://www.youtube.com/watch?v=OAn40128fy8

[Breezy]

https://www.youtube.com/watch?v=OAn40128fy8

Haha so true, my 84 yr old neighbour has been driving her 1986 Corolla around for ever with the oil light on (Sometimes she asks me to check it and i dump a few litres in for her) She also revs the guts out of it from cold including during winter.

[kiwi2007]

"Heartland may have to revert to a more costly rights issue, looking to raise the capital that it needs to fund its Australian purchase and growth plans.

Clearly the NZ market shares my expectation.

Unaccountably Heartland's share price has fallen by more than 10 percent, in recent days.

I infer from this that the institutions expect Heartland to announce soon a discounted rights issue. It is always an institutional response to sell off before any announcement, forcing the issuer to accept an even lower share price as a result of the sell-off. Having sold off early, the institutions then buy back more cheaply into the rights issues, pocketing a tidy gain. There is nothing illegal about this game unless knowledge is held by a participant in the game."

Cut and paste from Chris Lee

[kiwi2007]

Looking at the charts I see it bounced nicely (again) off the 20 RSI on the 23rd (150c) - done similar a few times this last year. Short term traders friend?

[Fiordland Moose]

Aye Kiwi2007 I read that article.  I think Chris Lee has co-mingled with what Heartland Bank (NZ) were looking to do with the T2 subnote issue, and what may be required if HGH/Heartland Australia press ahead with the Challenger acquisition.

From the v little detail released on the proposed but not yet released (and very likely postponed) tier 2 subordinated note issue, is that the issuer was Heartland Bank - the NZ deposit taking bank regulated by the RBNZ - & issued to support meeting the RBNZ's new regulated core and total capital ratios which are required by 1 July 2028. I don't think it had anything to do with the proposed Australian acquisition. It's not surprising in the aftermath of Credit Suisse's demise and the associated write off of its AD1 notes that Heartland has paused this raise - not withstanding Credit Suisse's t2 subnotes went completely unscathed and retained full value during its merger with UBS. If they pressed ahead now, at what cost would they have to bare? Best to wait, in my view.

But the t2 note wasn't in support of the Challenger acquisition. There are still multiple approvals required, and that initiative, if it transpires (who knows in this environment), is a completely different initiative and separate to the t2 subnote issue. There is the modest initial outlay to acquire challenger assuming approvals are granted. But MGMT's gameplan is to transition the Heartland's Australian's subsidiary away from being completely wholesale funded into meaningfully funded by deposits after gaining its ADI (which is why they are buying Challenger). That has capital requirements in itself - if you raise deposits, you have to set aside more capital than you would if you were wholesale funded. Hence, it's been clear to much pretty everyone for a long time that if Heartland were to acquire Challenger some sort of rights issue would be required to fully position Heartland Australia into a full fledged deposit taking bank. Who knows the timeline associated with it but if I were mgmt I'd probably prefer to just raise it all and get it over with notwithstanding all the flack they'd get for it.

We all know how that will go down with retail punters.

But why would I reserve capital for that eventuality if the SP bottomed out upon news of another capital raising?

First - StockCo's funding is lazy and sloppy and not rated, but Heartland Australia already is, so step 1) may be a refi of that in the near term at better margin. But in the medium term, accessing deposits to then retire wholesale funding and fund the Australian division with deposits has the potential to create a step change in Australian NIM. Macquarie estimate the move to having *some* retail funding could reduce Aussie RM funding costs by 100bps and 200bps for stockco. Forbar reckon aggregate Aussie NIM could conservatively expand by 75-100bps which would add in excess of $10m to NPAT pa.

So I can see why MGMT are looking at it and pursuing it. The market environment has obviously gotten harder in the last month and sentiment more risk adverse (which I am alive to in my own decision making process). It also may prove to be too difficult in the current environment and they just shelve it for the time being.

But at the end of the day the T2 subnote issue and the OZ acquisition are two very different and distinct initiatives.

[Basil]

FY23 PE's straight off Market Screener so based on average analyst forecast.
BOQ 9.1
ANZ 9.5
HGH 9.8
WBC 10.3