“Banks boost margins with 12% loan rates (Financial Times)” plus 3 more |
- Banks boost margins with 12% loan rates (Financial Times)
- Bank of Montreal profit up 6.9 percent (The Globe and Mail)
- Mint C.E.O. Eyes Canada and U.K. for Expansion (New York Times)
- Vandergrift Family Concerned Over Budget Crisis (KDKA Pittsburgh)
| Banks boost margins with 12% loan rates (Financial Times) Posted: 24 Aug 2009 08:45 AM PDT Borrowers looking to take out personal loans are having to pay double digit premiums over the base rate as banks increasingly stretch their profit margins. New research from Moneynet.co.uk shows that the average unsecured loan rate has risen from 8.71 per cent to 12.27 per cent in the past five years, while the base rate has dropped to its lowest ever level. "With base rate now a mere 0.5 per cent compared with 4.75 per cent five years ago, lenders margins have shot up from 3.96 per cent to a staggering 11.77 per cent," said Andrew Hagger at Moneynet. He pointed out that back in August 2004 Northern Rock was offering a loan rate of 5.8 per cent, which would have provided a margin of just 1.05 per cent. But now the best rate, available from Sainsbury's finance, is 7.9 per cent, generating a margin of 7.4 per cent for the bank. "When credit was plentiful lenders were keen to offer low rates to get high volumes of business," added Hagger. "Now the situation is totally different, credit is tight, bad debts are rocketing and loan providers are far more cautious but operating on a vastly increased margin." Research from Moneysupermarket.com found that borrowers looking for smaller loans, of around £5,000, are being hit harder than those looking to borrow more. Tim Moss, head of loans and debt at Moneysupermarket, said banks and building societies were being more cautious about who they will lend to than in pre-credit crunch days. "Some lenders are introducing market leading deals, but these are restricted to customers who have an existing relationship," he explained. One reason banks may be charging more for personal loans is that it has become more difficult to sell payment protection insurance (PPI) alongside loans. This insurance was extremely lucrative for banks and helped to boost their margins. Without it many have had to charge more for the actual loan. "The clampdown on the sale of PPI has caused providers to hike up prices to recoup lost revenue. As a result is has become increasingly difficult to get a competitively priced loan," said Moss. Also, fewer banks are offering unsecured loans as they become more concerned about rising bad debts. Moneynet said there had also been a move towards "personal pricing", where loan rates are not advertised and the applicant is unaware of the rate they will be offered until they apply.  This posting includes an audio/video/photo media file: Download Now |
| Bank of Montreal profit up 6.9 percent (The Globe and Mail) Posted: 25 Aug 2009 05:54 AM PDT TORONTO (Reuters) - Bank of Montreal said profit rose 6.9 percent in the third quarter, surpassing expectations, as it set aside less money to cover bad loans and trading revenue surged. Canada's fourth-largest bank posted net earnings of C$557 million ($518 million) in the quarter, ended July 31, up from C$521 million a year earlier. Per-share profit fell to 97 Canadian cents from 98 Canadian cents because of an increase in shares outstanding. Analysts, on average, had expected 95 Canadian cents a share after exceptional items, according to Reuters Estimates. "We are seeing positive signs that the economic environment is starting to turn from challenging to more normal conditions, and BMO is well positioned for further growth as conditions continue to improve," Chief Executive Bill Downe said in a statement. Capital markets boosted earnings as the rebound in global markets spurred trading and deals. Capital markets income grew 30 percent to C$343 million, while net interest income rose 14 percent to C$184 million. Canadian personal and commercial banking was solid, with income up 13 percent to C$356 million. As expected, BMO's U.S. operations were a drag on earnings. The bank, which has sizable operations in the U.S. Midwest through its subsidiary Harris Bank, said net income from U.S. operations fell 10.7 percent to C$25 million. "There are higher levels of impaired loans and the costs of managing this portfolio have increased," BMO said of the U.S. operations. Overall provisions for loan losses fell to C$417 million from C$484 million a year ago. The amount of money set aside to cover bad loans a year ago included C$247 million to cover two corporate accounts related to the U.S. housing market. Banks are setting aside more money to cover bad loans because the economic slump is making it harder for consumers and businesses to repay their debts. BMO said it had set aside C$193 million to cover bad loans in the United States and C$144 million in Canada. The dividend was unchanged at 70 Canadian cents a share and the Tier I capital ratio rose to 11.7 percent -- one of the highest in Canada and well above that of global competitors. ($1=$1.08 Canadian) (Reporting by Andrea Hopkins; editing by John Wallace) © Reuters Limited. All Rights Reserved.  This posting includes an audio/video/photo media file: Download Now |
| Mint C.E.O. Eyes Canada and U.K. for Expansion (New York Times) Posted: 24 Aug 2009 03:22 AM PDT Mint.com, the personal finance site that has racked up 1.4 million users in the United States, might expand up north and across the pond early next year, according to its founder and chief executive officer, Aaron Patzer. The Mountain View, Calif.-based start-up tracks personal checking accounts, credit card spending and retirement portfolios to help users manage their finances. It recently raised $14 million in a third round of financing and introduced features this week advising employees on how to roll over their retirement savings when switching jobs. The company is one of Silicon Valley's bright lights at a time when the initial public offering market remains cloudy and other consumer-facing companies have struggled to eke a living out of advertising. "Canada and the U.K. would definitely be the first. I would like to say early next year," Mr. Patzer told VentureBeat. Growing internationally may be a little more logistically difficult for a company like Mint than it is for other consumer-focused companies, since the start-up will have to weave its way through a variety of domestic banking laws and different financial partners to reach customers overseas. (You'd have to reach out to Barclays or Royal Bank of Scotland to work in Britain, not Wells Fargo, for example.) The company may also introduce products involving credit or FICO scores and move into the small business market. "Eventually we'll get into loans, debt consolidation and mortgage payments," he said. "We want to be able to say to customers: We know you've got excellent credit, you could qualify for a loan at 5.74 percent that would reduce your debt payments by this much." Because Mint earns revenue by charging banks to promote their offerings to users, moving up the ladder into higher-ticket financial products could also bolster the value of the share Mint skims off the top.  This posting includes an audio/video/photo media file: Download Now |
| Vandergrift Family Concerned Over Budget Crisis (KDKA Pittsburgh) Posted: 25 Aug 2009 03:19 AM PDT
VANDERGRIFT (KDKA) ―
Jobs have been cut and essential services have been put on hold while lawmakers haggle over funding. It has been going on for nearly two months. Monday evening is bill night in the Dunmire's home in Vandergrift. Jimmy Dunmire pays them, but these days it's not easy. "It makes me nervous," said Dunmire. "It makes me very nervous because it makes me worried where I'm going to get all this extra money to pay all of these bills." Just about everyone in the Dunmire family is being affected by the state budget crisis. "Everything that we do to make a living is somehow funded by the state through our jobs," said Dunmire. They have two daughters in school that can't get student loans. Meanwhile, their mom works as a home health care aid, which is a state-funded job and her hours have been cut drastically. One of the Dunmire's daughters, Cynthia, says she has been hit twice by the budget battle. She says her state-funded day care is running out of money and her student loans are unavailable. "I'm 21-years-old. I have a full-time job; I work at a daycare twice a week," she said. "I go to school and I have a 5-year-old son to take care of; so it's very frustrating to worry about whether or not you're going to have a paycheck that month or not." Of all the financial difficulties that the Dunmires are going through, the most upsetting part they say is a situation involving their foster children. The state isn't making the payments to the family, so the Dunmires don't really have money to pay the bills for their foster children. The family said they were told if they wished to do so, they could drop the children off at the state agency where they picked them up. But at some point those kids could end up living in a shelter. "We didn't get into foster care to turn children away," said Jimmy Dunmire. "We got into foster care to help children who are in need and to help them through their tough times. I don't care if it takes my last penny, I'm not going to turn those children away." For now, the Dunmires say they are cutting back. Also, as they wait for the budget crisis to end, the Dunmires are using money given to them by their children for their 25th wedding anniversary, which they were supposed to use for a trip to Hawaii.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)  This posting includes an audio/video/photo media file: Download Now |
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