Monday, March 8, 2010

“Massive rise in interest rates on personal loans (Independent)” plus 3 more

“Massive rise in interest rates on personal loans (Independent)” plus 3 more

Massive rise in interest rates on personal loans (Independent)

Posted: 07 Mar 2010 04:25 PM PST

Banks have massively hiked interest rates on personal loans during the slump, raising the cost of finance for cars, sofas, and other major purchases by hundreds of pounds, new research for The Independent shows today.

Figures from the personal finance group Defaqto show the average annual percentage rate (APR) on a £5,000 loan has jumped from 9.8 per cent to 13.9 per cent in the past two years, increasing the cost of borrowing by 42 per cent.

Banks and building societies have raised the cost of unsecured borrowing even as the Bank of England base rate has plummeted – between March 2008 and this month, the Bank's benchmark fell from 5.25 per cent to a 300-year low of 0.5 per cent. Over the same period, the cost of servicing a £5,000 loan on a three-year term, for example, has increased by £352 to £1,143.

During the same two years, which includes the six-quarter recession that ended in September, lenders have increased their APR on credit cards to a 12-year high of 18.8 per cent.

Banks are believed to be using the high rates to discourage unsecured borrowing, as they repair damage done to their balance sheets by reckless lending that threatened to push several into bankruptcy.

Figures from the British Bankers' Association show that its members have slashed their exposure to structured personal loans by £15bn in two years – from £67bn at the start of 2008 to £52.3bn last January. In January, banks lent 29 per cent less in the form of personal loans than they did the previous January.

Many banks will now only lend to customers with current accounts, and are matching loan rates more closely to the credit records of individuals. They are also rejecting more applications for credit – which poses difficulties for businesses reliant on consumer credit, such as car dealerships and furniture showrooms.

"There is not a great deal of appetite among the lenders to do lots of un- secured lending, and for the last few years there is a definite push towards 'quality not quantity'," said David Black, a banking analyst at Defaqto. "Many of the banks are focusing their un- secured lending on existing customers; so to get an unsecured loan or credit card from HSBC or RBS you now have to have a current account with that provider."

He added that lenders were also making up for the loss of profits from Payment Protection Insurance (PPI), the lucrative policies traditionally sold with loans. Under new rules introduced by the Competition Commission in October, providers have been banned from asking borrowers to take out a policy to cover sickness or redundancy in the first seven days of a credit agreement.

Mr Black said: "The absence of PPI sales income is one of the main factors behind the rise in unsecured loan rates. The banks used to make a big profit from selling payment protection insurance in conjunction with unsecured loans, but this income stream has reduced substantially."

Several high-street lenders have announced hefty increases in rates on personal loans since the start of 2010.

In January the Halifax bank, now in the partially state-owned Lloyds group, increased its APR on loans below £5,000 from 18.8 per cent to 22.9 per cent, and for loans of £5,000 to £6,999, from 12.8 per cent to 19.9 per cent.

Last month, fellow high-street giant HSBC raised its APR from 8.7 per cent to 9.9 per cent. Marks & Spencer Money did the same for loans over £7,500.

Banks have also been forced to write off more bad debts as people struggling in the slump are unable to make repayments. Lloyds increased bad debt charges from unsecured lending by £1bn to £3.4bn last year, saying impairment losses were "sensitive to economic conditions, particularly unemployment levels".

Similarly, RBS Group wrote off £1.5bn of unsecured lending in 2009, up from £988m in 2008. In September, Nationwide building society said it was cautious about handing out loans, given the slump, and would continue to concentrate on "quality" lending rather than achieving more volume.

The Spanish banking group Santander slashed new unsecured personal lending by 36 per cent last year.

HSBC and RBS declined to comment. Lloyds said: "We offer personal pricing, so it's not linked to the Bank of England base rate. It's based on a number of factors that takes into account a customer's circumstances."

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ICBC Plans No Fund Raising; 2009 Loans Hit Record (Update1) (BusinessWeek)

Posted: 07 Mar 2010 09:20 PM PST

March 07, 2010, 11:37 PM EST

(Adds analyst comment in fourth paragraph, shares in fifth paragraph.)

March 8 (Bloomberg) -- Industrial & Commercial Bank of China Ltd., the world's largest lender by market value, said it has no fund-raising plans even after boosting new loans by 24 percent to a record last year.

ICBC's capital adequacy ratio is "sound" and the highest among rivals, and pressure to increase capital is "not big," President Yang Kaisheng said at a press conference in Beijing yesterday.

China's banks doled out a combined 9.59 trillion yuan ($1.4 trillion) in new loans last year, helping the government engineer a turnaround in the world's third-largest economy. The credit binge drained lenders' capital and sparked concerns about asset bubbles, a higher number of bad loans and increased inflation pressure.

"We believe the chairman's optimism can trigger better sentiment about the bank, as well as the whole industry," Ivan Li, an analyst at Kim Eng Securities Hong Kong Ltd., wrote in a note to clients today. Li recommends investors buy ICBC shares.

The bank's stock rose 1.9 percent to HK$5.91 as of 12:10 p.m. in Hong Kong. Its shares gained 0.4 percent in Shanghai to 4.86 yuan as of the 11:30 a.m. mid-day break, compared with a 0.8 percent increase for China's benchmark Shanghai Composite Index.

Bank Fundraising

China's publicly traded banks have already raised about 131 billion yuan from bond and share sales since the second half of last year to replenish capital drained by loan growth, and they have announced plans to raise a further 127 billion yuan, according to Bloomberg data.

Beijing-based ICBC's capital adequacy ratio, a measure of the bank's financial strength, fell to 12.60 percent at the end of third quarter, from 13.06 percent at the end of 2008.

The nation's policy makers aim to avert asset bubbles and restrain inflation by limiting new credit at 7.5 trillion yuan this year. China's growth accelerated to 10.7 percent in the fourth quarter, the fastest pace since 2007, and property prices climbed the most in 21 months.

ICBC said it will boost financing to projects already under construction and to small-and-medium sized firms and cut loans to new projects that are not government-backed and if they're energy-intensive or polluting. Loans would also be reduced to sectors with overcapacity, Yang said.

2010 Loans Target

Loans by the bank this year will be less than in 2009, Yang said. ICBC's new loans were 1.03 trillion yuan last year, Yang said. That's a record, according to calculations based on Bloomberg data.

After a government bailout five years ago, ICBC is now the world's biggest bank by value. The lender has more than doubled profit during the past three years and has more than 16,000 outlets nationwide and 112 branches outside China, and 190 million personal customers -- equivalent to the populations of Russia and Canada combined.

ICBC on March 4 submitted a tender offer to buy all shares in Thailand's ACL Bank Pcl in a deal that would give ICBC a foothold in the southeastern Asian nation after acquisitions in Indonesia, Macau, South Africa and Canada since 2007. The bank aims to triple the share of profit coming from abroad to 10 percent.

ICBC will be "active and prudent" with overseas expansion this year, Yang said.

--Luo Jun, Zhang Dingmin. Editors: Joost Akkermans, Brett Miller

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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Banks’ consumer loans reach P413B in 4Q 2009 (Malaya)

Posted: 08 Mar 2010 06:09 AM PST

More consumer loans sourced from universal, commercial and thrift banks were recorded in the fourth quarter of last year, data from the Bangko Sentral ng Pilipinas (BSP) showed.

As of end-December 2009, the consumer loans (CLs) of universal/commercial banks (U/KBs) and thrift banks (TBs) reached P413.1 billion, higher by 3.2 percent than last quarter's P400.1 billion and by 8.7 percent than last year's P380.0 billion.

Meantime, the proportion of total CLs to total loan portfolio (TLP), exclusive of interbank loans dropped to 15.2 percent from last quarter's 16.0 percent but went up from last year's 14.8 percent ratio.

By type of CLs, Residential Real Estate Loans accounted for the bulk of total CLs at 39.4 percent or P162.6 billion.

Credit Card Receivables came second with a share of 27.9 percent or P115.5 billion.

Auto Loans and Other Consumer Loans followed with shares of 22.9 percent or P94.5 billion and 9.8 percent or P40.5 billion, respectively.

By industry, U/KBs held the majority of the banking industry's total CLs at 60.3 percent or P249.2 billion.

TBs accounted for the remaining share of 39.7 percent or P163.9 billion.

Loan quality improved as the ratio of non-performing CLs to total CLs of U/KBs and TBs dropped to 9.0 percent from last quarter's 9.2 percent but rose from last year's 8.6 percent ratio.

BSP said that the easing of the ratio from last quarter occurred as the growth in non-performing CLs was outweighed by the larger expansion in total CLs.

Non-performing CLs settled at P37.3 billion, up by 0.7 percent or P0.3 billion from last quarter.

Meantime, the non-performing CLs to total non-performing loans (NPL) ratio stood at 29.2 percent, up from 28.0 percent last quarter and 25.3 percent last year.

Meanwhile, non-performing CLs to TLP ratio settled at 1.4 percent, easing from 1.5 percent last quarter but up from 1.3 percent last year.

As of end-December 2009, other consumer loans (Other CLs) of U/KBs and TBs amounted to P40.5 billion, up by 10.4 percent from last quarter and by 9.4 percent from last year.

The proportion of Other CLs to TLP, exclusive of interbank loans stood at 1.5 percent, same as last quarter but slightly up from last year's 1.4 percent ratio.

Other CLs refer to loans granted to individuals to finance other personal and household needs such as purchase of household appliances, furniture and fixtures and/or to pay taxes, hospital and educational bills.

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Payday Loans Lender Urges Customers to Watch Out For Mimicking Fraudsters and Scammers (Marketwire)

Posted: 07 Mar 2010 10:08 PM PST

EDGWARE, UNITED KINGDOM--(Marketwire - March 8, 2010) - Lending Stream Ltd, a leading payday loans company in the UK, wishes to draw the attention of its customers and members of the general public to the prevalence of fraudulent activity being perpetuated by fraudsters aiming to defame the company and mislead its customers. It has been noticed that the name of the company, its logo as well as its address are being misused in attempts to defraud the public through false correspondence and other scams. This type of fraud may be via email, letters, text messages, facsimile or by using a website claiming to be that of Lending Stream Limited.

The customers of Lending Stream are being supplied with false, unscrupulous and misleading information by the scammers. The information includes business deals or non-existent products, as well as false payday loan products and product lines through anonymous letters. In order to provide legitimacy to their mails, the scammers send their letters on imitation Lending Stream Limited letterheads or through anonymous letters.

"We believe in responsible lending and it is a matter of grave concern that some of our customers are being misled with false information. We strongly advise customers to exercise caution while providing personal information, sending money or disclosing bank details to any person claiming to represent Lending Stream or to have a relationship with the company," a spokesperson from Lending Stream commented.

Lending Stream is leaving no stone unturned to trace and curb such unsolicited correspondence and is working closely with all regulatory authorities and law enforcement agencies to bring such fraudsters to Justice.

"It is our constant endeavour to provide the best and unparalleled support to our esteemed customers, while working earnestly to protect them from falling prey to certain scammers' evil motives. We will do all we can to uphold our strong values, goodwill and clean reputation that we have built in this business for around two years," the spokesperson stated.

Lending Stream urges its customers to seek information/clarifications by contacting its business office directly and/or online through info@lendingstream.co.uk or call the customer service department directly at 0844 251 0530.

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