Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Dairy farm values could fall 40 percent from peak

Thursday 02 June 2016 03:21 PM

Heartland Bank warns dairy farm values could fall 40 percent from peak

By Edwin Mitson

June 2 (BusinessDesk) - Heartland Bank, the Auckland-based lender, has told investors it is monitoring the dairy sector "with close attention" at a presentation and has warned farm values could fall 40 percent from peak to trough if the downturn continues or worsens beyond current expectations.

Exposure to dairy farmers makes up 8 percent of its total lending book and 17 percent of its net receivables, which is the total money owed to the bank by customers minus amounts the bank accepts will never be repaid and has written off.

The presentation was delivered by chief executive Jeff Greenslade, head of banking Chris Flood and chief financial officer Simon Owen and has been published to the stock market operator, NZX.

The trio say that in the bank's opinion, the majority of dairy farms could convert to sheep or beef farms if dairy prices stay low or get worse such that the viability of the industry is threatened. They say dairy farms values would effectively be underwritten by the value of sheep and beef farms.

Heartland's average loan to value ratio for its dairy loans is 59 percent and the bank says profitability would reduce if such a switch occurred. The bank's leaders insist it would remain profitable with no impact on capital if such a scenario came to pass.

It has also indicated that it will shift its marketing and advertising spend from traditional channels like TV, Radio, and the press, to lower-cost, targeted digital channels. Heartland took a stake in peer-to-peer lender Harmoney in September 2014. TV3 owner Mediaworks yesterday reported a soft advertising market for television in which advertising revenue fell by 1.7 percent or $10.6 million.

Shares in Heartland Bank were unchanged at $1.27 and have fallen 3.8 percent since the start of the year.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Frog Recruitment: Kiwi Workers Reluctant To Make Business Trips Across The Ditch Despite Trans-Tasman Bubble Opening

When the trans-Tasman travel bubble opens today, many Kiwi companies won't be rushing to buy an air ticket, reluctant to cross the ditch to do business. The latest survey conducted by leading recruitment agency, Frog Recruitment of nearly 1,000 New Zealand ... More>>

Tourism: Employers Welcome Back Working Holidaymakers

Tourism businesses gearing up for the return of Australian visitors from next week will be relieved to learn that they will also have access to an offshore pool of much-needed job candidates, Tourism Industry Aotearoa says. Tourism employers around ... More>>

Commerce Commission: Latest Broadband Report Confirms Improved Performance Of Premium Fibre Plans

The latest report from the Commerce Commission’s Measuring Broadband New Zealand programme shows that the performance of Fibre Max plans has improved substantially. This follows a collaboration between the Commission, its independent testing partner, ... More>>

Air New Zealand: Capital Raise Deferred

Air New Zealand has decided to defer its planned capital raise to later in 2021 allowing more time to assess the impacts of recent developments on the airline’s path to recovery. 'We’ve seen some clearing of COVID-19 clouds recently, with ... More>>


Stats NZ: New Report Shows Impact Of Demands On Land In New Zealand

A new environmental report released today by the Ministry for the Environment and Stats NZ, presents new data on New Zealand’s land cover, soil quality, and land fragmentation. The land cover data in the report, Our land 2021 , provides the most ... More>>

ALSO:

Stats NZ: March Card Spending Rebounds Despite COVID

There was a lift in retail card spending in March following a fall in the lockdown-disrupted February month, Stats NZ said today. Seasonally adjusted retail card spending rose by $53 million (0.9 percent), compared with February 2021. Visit our website to read ... More>>

PwC: Outcome Of Review Into Air New Zealand Gas Turbines Business

Air New Zealand has received the report into its Gas Turbines business from independent external advisers PwC. Air New Zealand Chairman Dame Therese Walsh says the report identified a range of effective controls in the Gas Turbines revenue contracting ... More>>