two years ago, Mama Monique and her six children were evicted from their home in the Democratic Republic of Congo.
Now, after getting an initial $50 loan, she owns and runs a local bread and sweet roll company out of her home, rents an apartment and can afford to send her children to school.
Mama Monique is just one success story of microfinance, a business model that helps people in developing countries work their way out of poverty through small loans - anywhere from $50 to $1000 - with little or no interest rate and no collateral.
They use the loan money as capital to start small businesses to sustain themselves and, over time, pay back the loans.
At the University, the Microfinance Alliance, a student group that promotes awareness of the economic model, attended and participated on panel discussions at the Nobel Peace Prize Forum this weekend at Concordia College in Moorhead, Minn.
Mohammed Yunus, who won the Nobel Peace Prize in 2006 for his pioneering work in microfinance, was one the forum's featured speakers.
Although the group traveled to Moorhead for the event, it was also held at the Hubert H. Humphrey Institute of Public Affairs at the University the next day.
Yunus founded the Grameen Bank, one of the first microfinance organizations, in Bangladesh in 1976. According to Grameen Bank's January figures, the bank lent money to 7,440,000 people with a full loan recovery rate of 98.28 percent.
The high return rate on the loans, despite no collateral incentive and low interest rates, makes the system unique and almost completely self-sustaining.
Because most of the money loaned out is repaid in full, it can then be reloaned to others in need.
Jonathon Newhouse, a board member for the Microfinance Alliance, learned of Mama Monique's story when he was on a student trip to the Democratic Republic of Congo with Hope International, a nonprofit group that does microfinance work.
"She was just so grateful," Newhouse said. "You take someone who's just so dispirited and without any hope for improving their situation, and now they're empowered to take charge of their own life. It's a really amazing thing."
Since people in poor countries don't typically have assets for collateral on a traditional credit model, they would otherwise be subjected to loan sharks who sometimes charge 200 percent interest a day, Newhouse said.
Microfinance Alliance President Adrienne Peirce said the high microfinance loan return rate is partially because of the flexible structure of small, weekly payments, but also out of community support.
"Clients are also enthusiastic about repaying loans in many cases because they appreciate the opportunity they've been given to improve their income," she said.
Dan Kaskubar, who is involved in Microfinance Alliance, said he's amazed how little it takes to impact someone's life through microfinance.
"You give an initial piece of capital, and that's enough to jump-start an entire virtuous cycle of income generation in developing countries," he said. "There is no other way that you and me or anyone else can make such a dramatic impact in another human's life, ever."
While microfinance is usually done through large organizations like Hope International or the Grameen Bank, individuals can put money toward a loan for someone, too.
Kiva is an online organization for individual citizens to invest money in specific recipients, listed on its Web site.
Investors can sometimes keep in touch with the business' progress and then eventually they get the money returned to them, depending on the terms of the loan.
Felix Meschke, an assistant professor of finance in the Carlson School, isn't involved in Microfinance Alliance, but knows how little it takes to change a person's life through the microfinance model.
"Microfinance is something where you say, 'OK, I've got those $25 and instead of earning half a percent in my checking account, I'm going to lend this to somebody who seems to have a decent plan,' " he said. "It's a relatively easy way for people in the developed world to help out."
Peirce, of Microfinance Alliance, said she's excited about the strides the group is making.
"It's great to be a part of something that helps people's lives and can inspire you to put in a lot of effort when you see how it makes people's lives better," she said. "You could easily argue that ending world poverty is coming within reach, and it's an interesting challenge."
http://www.mndaily.com/
Monday, March 10, 2008
Friday, March 7, 2008
SPEAK OUT: In health insurance, the fox is watching the henhouse
DUXBURY —
I fully agree with one point in your editorial on controlling health care costs: “That’s what you get when you let the health insurance industry write the reforms.”
I would like to refer you to a recent New England Journal of Medicine article that came out Feb. 7. The article, “Market-Based Failure – A Second Opinion on U.S. Health Care Costs,” refutes the notion that the market can optimize the efficiencies of medicine.
In one of the early paragraphs he points out the inefficiency of our multiple-payer bureaucracies which “siphon off $400 billion to $500 billion of the $2.2 trillion spent” for total health care expenditures.
I have not read recently about any layoffs at the large health insurance companies due to poor profits. Insurance companies are not forced to increase their efficiency. When their profits are threatened, they can raise premiums, increase the cost of deductibles and co-payments, decrease pay-outs to doctors and hospitals and limit their services to patients.
No one is asking them to reduce the salaries of their executives, or pare down their advertising budget, streamline their billing processes, or use their clout to get pharmaceutical companies to lower the cost of medications.
How else do you explain the $16.4 million severance package that the retiring CEO of Blue Cross Blue Shield William C. Faasen is receiving? Because he made the business profitable.
I agree that businesses pay a lot to insure their employees. It is only natural for an employer to look at the bottom line cost for his company’s insurance. What the boss does not realize is the insurance companies are not reducing the cost of the insurance by increasing their own efficiency, but reducing what they pay to doctors and hospitals.
The smartest graduates will be going into business professions to make a good living, not to medical school. And when medical graduates come out of school with large loans, the lure of a high-paying specialty is more attractive than primary care. Then everyone wants to know why there is a shortage of primary care health professionals in this state.
I do not believe insurance companies have patients’ best interests in mind. The fox is never good at guarding the henhouse. They are a business, and their first concern is their bottom line.
Thus, health care for all will not be affordable if we pursue health insurance for all without recognizing it for the inefficient business bureaucracy it is.
http://www.patriotledger.com/opinions/x758352068
I fully agree with one point in your editorial on controlling health care costs: “That’s what you get when you let the health insurance industry write the reforms.”
I would like to refer you to a recent New England Journal of Medicine article that came out Feb. 7. The article, “Market-Based Failure – A Second Opinion on U.S. Health Care Costs,” refutes the notion that the market can optimize the efficiencies of medicine.
In one of the early paragraphs he points out the inefficiency of our multiple-payer bureaucracies which “siphon off $400 billion to $500 billion of the $2.2 trillion spent” for total health care expenditures.
I have not read recently about any layoffs at the large health insurance companies due to poor profits. Insurance companies are not forced to increase their efficiency. When their profits are threatened, they can raise premiums, increase the cost of deductibles and co-payments, decrease pay-outs to doctors and hospitals and limit their services to patients.
No one is asking them to reduce the salaries of their executives, or pare down their advertising budget, streamline their billing processes, or use their clout to get pharmaceutical companies to lower the cost of medications.
How else do you explain the $16.4 million severance package that the retiring CEO of Blue Cross Blue Shield William C. Faasen is receiving? Because he made the business profitable.
I agree that businesses pay a lot to insure their employees. It is only natural for an employer to look at the bottom line cost for his company’s insurance. What the boss does not realize is the insurance companies are not reducing the cost of the insurance by increasing their own efficiency, but reducing what they pay to doctors and hospitals.
The smartest graduates will be going into business professions to make a good living, not to medical school. And when medical graduates come out of school with large loans, the lure of a high-paying specialty is more attractive than primary care. Then everyone wants to know why there is a shortage of primary care health professionals in this state.
I do not believe insurance companies have patients’ best interests in mind. The fox is never good at guarding the henhouse. They are a business, and their first concern is their bottom line.
Thus, health care for all will not be affordable if we pursue health insurance for all without recognizing it for the inefficient business bureaucracy it is.
http://www.patriotledger.com/opinions/x758352068
Bankers fear commercial loan ills are next
As the housing market crumbles and recession fears dog the broader economy, bankers are concerned local commercial lending will be next.
Commercial-oriented lending totaled $46 billion as of Sept. 30, 2007, and accounts for 28 percent of metro Atlanta's $162 billion loan market, according to the Federal Deposit Insurance Corp.
Bankers are already noting loans for commercial purposes -- either the development of commercial real estate (called CRE) or for business expansion (known as C&I) -- are widely expected to be the next to have repayment problems.
"We're expecting a deterioration in both CRE and C&I throughout this year, influenced by the broader economy and residential real estate," said Doug Williams, CEO of Atlantic Capital Bank.
http://www.bizjournals.com/atlanta/stories/2008/02/18/story9.html
Commercial-oriented lending totaled $46 billion as of Sept. 30, 2007, and accounts for 28 percent of metro Atlanta's $162 billion loan market, according to the Federal Deposit Insurance Corp.
Bankers are already noting loans for commercial purposes -- either the development of commercial real estate (called CRE) or for business expansion (known as C&I) -- are widely expected to be the next to have repayment problems.
"We're expecting a deterioration in both CRE and C&I throughout this year, influenced by the broader economy and residential real estate," said Doug Williams, CEO of Atlantic Capital Bank.
http://www.bizjournals.com/atlanta/stories/2008/02/18/story9.html
Thursday, February 21, 2008
Treasury cannot be allowed to rob bank investors
For all its travails, Northern Rock in public ownership will, like a public limited company, have to publish audited accounts. Alistair Darling, chancellor of the exchequer, has said the mortgage lender will return to the private sector in due course. Suppose that, when the last set of accounts before its reprivatisation appears, these show that the loan from the state (originally from the Bank of England but now presumably to be assumed by the Treasury) is repaid in full at a market interest rate or above.
Suppose, in other words, that Northern Rock repays the loan on the same terms as billions of transactions on the sterling interbank market. The economic substance of the loan to Northern Rock would be difficult to distinguish from such loans, except that - at least in the early stages when it took the form of a lender-of-last-resort loan from the Bank of England - it was at a penalty rate (ie above market rates).
Should the proceeds from the reprivatisation of Northern Rock belong to the government or the original shareholders? That is the key question.
Mr Darling has made clear he does not intend to compensate shareholders at anywhere near the book value of the bank's capital, which was about £2bn (or £4 a share) in mid-2007 and must still be above £1.5bn. The plan - if the government's behaviour can be dignified with the word - seems to be that the shareholders are to get nothing.
The proceeds from the reprivatisation (presumably a few years from now) may be deemed to belong to the government. If so, would the government have robbed the shareholders of £1.5bn-£2bn? Mr Darling has no doubt been told by advisers that the government's approach is legally valid. But the shareholders can also recruit advisers to demonstrate that it is legally invalid and morally outrageous. Their central point will be that, in a nation proud of its respect for the rule of law, the government would have violated principles of private property.
Mr Darling and his advisers would no doubt say this is preposterous. They must think again. They ought, for example, to listen to the senior executives in the British banking industry who nine months ago took it for granted that the Bank of England was their bank, from which they could obtain cash in much the same way as commercial banks in other countries. Those executives have been dismayed that in recent weeks Spanish banks have been able to obtain finance easily from the European Central Bank (but actually from the Bank of Spain) on collateral that the Bank of England has questioned.
These Spanish banks have in many respects the same business model as Northern Rock; in autumn 2007 they faced the same difficulty in financing their assets. But they have not been punished by the Spanish authorities as Northern Rock has been punished by the UK authorities and the government. The Spanish government has not threatened to nationalise them, in spite of the huge advances they have received from the ECB.
The one correct point in the argument for nationalising Northern Rock was that the value of its assets, and hence its continued solvency, depended on the Bank of England loan. If Northern Rock had been forced last September to dispose of its assets as quickly as its depositors were withdrawing cash, those assets would have been sold at far less than their true value in normal circumstances and Northern Rock would have gone bust.
But central banks exist for the purpose of preventing runs or, at any rate, ensuring that runs are met by -lenderof-last-resort loans so the hurried liquidation of assets can be avoided. That is what is meant by the proposition, repeated in hundreds of textbooks, that "the central bank is lender of last resort to the banking system".
Western governments have deplored the Russian state's expropriation of privately owned oil companies. What the British government has done with Northern Rock - by falsely representing a business transaction at market rates or above as "state aid", encouraging a frenzy of hostile and largely silly press comment, cajoling the management and shareholders, and finally imposing a compulsory nationalisation without compensation - bears comparison with President Vladimir Putin's devices to steal assets in the former Soviet Union.
If Northern Rock does repay its loan from the state in full but its shareholders receive nothing, the British government's actions would amount to robbery under the law.
http://www.ft.com/
Suppose, in other words, that Northern Rock repays the loan on the same terms as billions of transactions on the sterling interbank market. The economic substance of the loan to Northern Rock would be difficult to distinguish from such loans, except that - at least in the early stages when it took the form of a lender-of-last-resort loan from the Bank of England - it was at a penalty rate (ie above market rates).
Should the proceeds from the reprivatisation of Northern Rock belong to the government or the original shareholders? That is the key question.
Mr Darling has made clear he does not intend to compensate shareholders at anywhere near the book value of the bank's capital, which was about £2bn (or £4 a share) in mid-2007 and must still be above £1.5bn. The plan - if the government's behaviour can be dignified with the word - seems to be that the shareholders are to get nothing.
The proceeds from the reprivatisation (presumably a few years from now) may be deemed to belong to the government. If so, would the government have robbed the shareholders of £1.5bn-£2bn? Mr Darling has no doubt been told by advisers that the government's approach is legally valid. But the shareholders can also recruit advisers to demonstrate that it is legally invalid and morally outrageous. Their central point will be that, in a nation proud of its respect for the rule of law, the government would have violated principles of private property.
Mr Darling and his advisers would no doubt say this is preposterous. They must think again. They ought, for example, to listen to the senior executives in the British banking industry who nine months ago took it for granted that the Bank of England was their bank, from which they could obtain cash in much the same way as commercial banks in other countries. Those executives have been dismayed that in recent weeks Spanish banks have been able to obtain finance easily from the European Central Bank (but actually from the Bank of Spain) on collateral that the Bank of England has questioned.
These Spanish banks have in many respects the same business model as Northern Rock; in autumn 2007 they faced the same difficulty in financing their assets. But they have not been punished by the Spanish authorities as Northern Rock has been punished by the UK authorities and the government. The Spanish government has not threatened to nationalise them, in spite of the huge advances they have received from the ECB.
The one correct point in the argument for nationalising Northern Rock was that the value of its assets, and hence its continued solvency, depended on the Bank of England loan. If Northern Rock had been forced last September to dispose of its assets as quickly as its depositors were withdrawing cash, those assets would have been sold at far less than their true value in normal circumstances and Northern Rock would have gone bust.
But central banks exist for the purpose of preventing runs or, at any rate, ensuring that runs are met by -lenderof-last-resort loans so the hurried liquidation of assets can be avoided. That is what is meant by the proposition, repeated in hundreds of textbooks, that "the central bank is lender of last resort to the banking system".
Western governments have deplored the Russian state's expropriation of privately owned oil companies. What the British government has done with Northern Rock - by falsely representing a business transaction at market rates or above as "state aid", encouraging a frenzy of hostile and largely silly press comment, cajoling the management and shareholders, and finally imposing a compulsory nationalisation without compensation - bears comparison with President Vladimir Putin's devices to steal assets in the former Soviet Union.
If Northern Rock does repay its loan from the state in full but its shareholders receive nothing, the British government's actions would amount to robbery under the law.
http://www.ft.com/
Balloon Loans For Car Purchases?
Balloon loans have become a familiar concept for those who have at least analyzed applying for a home mortgage loan. However, not everybody knows that there are also balloon loans for car purchases which can provide you advantageous terms and make your monthly payments affordable enough almost for everyone. Read on to discover the advantages and drawbacks of this car loan type.
Though almost everybody knows how balloon loans work, it is always smart to reexamine the concept so as to have the variables implied fresh to analyze how they work on car loans. Thus, we will give a short explanation on balloon loans and then, we´ll analyze how balloon loans can help you afford a car purchase and in which situations it is advisable to resort to car balloon loans.
Balloon Loans Explained
A balloon loan is a loan that has monthly payments that are not set up to repay the loan in full when the loan repayment program ends. Instead, when the loan schedule has ended, the borrower has to make a balloon payment which is larger than the rest of the payments and cancels the whole loan´s principal so until then, the loan isn´t fully paid off.
Balloon loans help keep the monthly payments low as they usually include interests only or maybe a small portion of the balance. Thus, when the final balloon payment is due, the balance of the loan usually equals the loan´s principal or is well close to it. This particularity makes balloon loans useful for certain situations or when the purpose is to eventually sell whatever has been bought with the loan´s money.
Consequences on Car Loans
Balloon loans are a good alternative when you can´t afford the monthly payments on a regular car loan. The affordability of balloon car loans´ monthly payments is excellent and lets almost anyone to obtain finance to purchase a car. However, the problem comes when you need to make that balloon payment at the end of the repayment program. If you can´t afford it, you´ll loose the vehicle and damage your credit.
Why do we say that car loans of the balloon type can be advantageous then? Because, if used correctly, the cost to you can equal almost nothing. If you are one of those who likes to change cars every now and then (i.e. every five years at most), balloon loans can be an excellent tool for you. By using balloon loans you can get a car, use it for five years owning it and paying monthly payments even lower than rent installments.
The idea is quite simple: You purchase a vehicle with a balloon car loan, you use your car for up to 75% of the loan´s repayment schedule and then you put it for sale. Hopefully, before the balloon payment is due, you´ll have completed the sale and canceled the loan in full. Then, you can take another balloon loan to purchase your new vehicle. It´s cheap and viable, the only problem is that you have to make sure that the car is sold before the balloon payment is due or else, you´ll have to obtain the money to cancel the loan or refinance it.
http://www.americanchronicle.com/articles/52569
Though almost everybody knows how balloon loans work, it is always smart to reexamine the concept so as to have the variables implied fresh to analyze how they work on car loans. Thus, we will give a short explanation on balloon loans and then, we´ll analyze how balloon loans can help you afford a car purchase and in which situations it is advisable to resort to car balloon loans.
Balloon Loans Explained
A balloon loan is a loan that has monthly payments that are not set up to repay the loan in full when the loan repayment program ends. Instead, when the loan schedule has ended, the borrower has to make a balloon payment which is larger than the rest of the payments and cancels the whole loan´s principal so until then, the loan isn´t fully paid off.
Balloon loans help keep the monthly payments low as they usually include interests only or maybe a small portion of the balance. Thus, when the final balloon payment is due, the balance of the loan usually equals the loan´s principal or is well close to it. This particularity makes balloon loans useful for certain situations or when the purpose is to eventually sell whatever has been bought with the loan´s money.
Consequences on Car Loans
Balloon loans are a good alternative when you can´t afford the monthly payments on a regular car loan. The affordability of balloon car loans´ monthly payments is excellent and lets almost anyone to obtain finance to purchase a car. However, the problem comes when you need to make that balloon payment at the end of the repayment program. If you can´t afford it, you´ll loose the vehicle and damage your credit.
Why do we say that car loans of the balloon type can be advantageous then? Because, if used correctly, the cost to you can equal almost nothing. If you are one of those who likes to change cars every now and then (i.e. every five years at most), balloon loans can be an excellent tool for you. By using balloon loans you can get a car, use it for five years owning it and paying monthly payments even lower than rent installments.
The idea is quite simple: You purchase a vehicle with a balloon car loan, you use your car for up to 75% of the loan´s repayment schedule and then you put it for sale. Hopefully, before the balloon payment is due, you´ll have completed the sale and canceled the loan in full. Then, you can take another balloon loan to purchase your new vehicle. It´s cheap and viable, the only problem is that you have to make sure that the car is sold before the balloon payment is due or else, you´ll have to obtain the money to cancel the loan or refinance it.
http://www.americanchronicle.com/articles/52569
Thursday, January 3, 2008
Home loan rates to be cheaper by 50-75 basis points
The New Year is likely to bring in some good news for home loan borrowers as most market players are anticipating a slash in the interest rates on home and personal loans. However, auto loan rates may remain intact, they say.
Bankers expect the Reserve Bank of India (RBI) to cut key interest rates during its monetary policy meeting on January 30, as the bank has been successful in fighting inflation and lowering credit growth.
"We expect an interest rate cut by the apex bank by the end of this month as banks are seeing a slackly credit growth. Following this, one can expect some respite in home loan rates as there will be some correction," said Ashvin Parekh, partner and national leader of global financial services at Ernst & Young.
• Check out our Yearender Special
Parekh expects home loan rates to drop by 50-75 basis points during this quarter, the last of this financial year.
Rana Kapoor, managing director & CEO, Yes Bank concurs. "Interest rates on home loans have peaked. While there might not be a reduction in the interest rate in January, there could be a slash in the interest rate during April by half a per cent," Kapoor said.
Talking about auto loans, bankers feel auto loan rates will remain where they are for the next 3-4 months, as they are witnessing a lacklustre demand for the same.
"We do not think interest rates will come down immediately. While the demand for car loans is still satisfactory, demand for two-wheeler loans is almost nil, due to high interest rates," said Ashok Khanna, executive vice-president and business head in-charge of auto loans at HDFC Bank. Khanna is confident that auto loans will not become cheaper but remain stable for now.
A senior official from a mid-sized private sector bank, who requested anonymity, backed Khanna's view. They too are seeing a lull in the demand for auto loans, owing to high interest rates. "While the four-wheeler segment looks somewhat healthy, demand two-wheeler segment looks unhealthy," said the official.
Demand for personal loans also is on the lower side and analysts are expecting a slide in rates, to help boost demand.
"During the first half of the year, we see bank credit diverted into sectors like agriculture and small and medium enterprises rather than personal loans," said Aseem Dhru, executive vice-president and head of business banking with HDFC Bank.
Ernst & Young's Parekh too expects personal loan issuances to dip, though interest rates will come down.
Lower interest rates will also help reduce default cases. "The default rate in case of personal loans is as high as 10 per cent for some banks. We think that lower interest rates will lead to lower defaults on personal loans," said a banking analyst.
ICICI Bank, India's largest private sector player, last year saw a substantial rise in delinquencies in its personal loan portfolio and a smaller rise in its home loan portfolio. "Due to high interest rates on loans, we have seen a rise in personal loan delinquencies, especially in the credit card portfolio. Again on the home loan side, there was a small rise in delinquencies, on account of people finding it unmanageable to repay their loans due to high rates on their homes," said a senior official of ICICI Bank, who did not wish to be named.
Public sector banks, however, are wary of a rate-reduction, and feel they will suffer losses from such a move.
"Even if there is a cut in the interest rates by the RBI, lending rates may not come down significantly as our cost of deposits are still high. We will suffer huge margin losses if reduce interest rates, as deposit rates have still not eased," said a senior official from a public sector bank.
http://sify.com/finance/fullstory.php?id=14584331
Bankers expect the Reserve Bank of India (RBI) to cut key interest rates during its monetary policy meeting on January 30, as the bank has been successful in fighting inflation and lowering credit growth.
"We expect an interest rate cut by the apex bank by the end of this month as banks are seeing a slackly credit growth. Following this, one can expect some respite in home loan rates as there will be some correction," said Ashvin Parekh, partner and national leader of global financial services at Ernst & Young.
• Check out our Yearender Special
Parekh expects home loan rates to drop by 50-75 basis points during this quarter, the last of this financial year.
Rana Kapoor, managing director & CEO, Yes Bank concurs. "Interest rates on home loans have peaked. While there might not be a reduction in the interest rate in January, there could be a slash in the interest rate during April by half a per cent," Kapoor said.
Talking about auto loans, bankers feel auto loan rates will remain where they are for the next 3-4 months, as they are witnessing a lacklustre demand for the same.
"We do not think interest rates will come down immediately. While the demand for car loans is still satisfactory, demand for two-wheeler loans is almost nil, due to high interest rates," said Ashok Khanna, executive vice-president and business head in-charge of auto loans at HDFC Bank. Khanna is confident that auto loans will not become cheaper but remain stable for now.
A senior official from a mid-sized private sector bank, who requested anonymity, backed Khanna's view. They too are seeing a lull in the demand for auto loans, owing to high interest rates. "While the four-wheeler segment looks somewhat healthy, demand two-wheeler segment looks unhealthy," said the official.
Demand for personal loans also is on the lower side and analysts are expecting a slide in rates, to help boost demand.
"During the first half of the year, we see bank credit diverted into sectors like agriculture and small and medium enterprises rather than personal loans," said Aseem Dhru, executive vice-president and head of business banking with HDFC Bank.
Ernst & Young's Parekh too expects personal loan issuances to dip, though interest rates will come down.
Lower interest rates will also help reduce default cases. "The default rate in case of personal loans is as high as 10 per cent for some banks. We think that lower interest rates will lead to lower defaults on personal loans," said a banking analyst.
ICICI Bank, India's largest private sector player, last year saw a substantial rise in delinquencies in its personal loan portfolio and a smaller rise in its home loan portfolio. "Due to high interest rates on loans, we have seen a rise in personal loan delinquencies, especially in the credit card portfolio. Again on the home loan side, there was a small rise in delinquencies, on account of people finding it unmanageable to repay their loans due to high rates on their homes," said a senior official of ICICI Bank, who did not wish to be named.
Public sector banks, however, are wary of a rate-reduction, and feel they will suffer losses from such a move.
"Even if there is a cut in the interest rates by the RBI, lending rates may not come down significantly as our cost of deposits are still high. We will suffer huge margin losses if reduce interest rates, as deposit rates have still not eased," said a senior official from a public sector bank.
http://sify.com/finance/fullstory.php?id=14584331
Wednesday, January 2, 2008
Horizon Bancorp increases loan loss provision for Q4
Horizon Bancorp (HBNC.O: Quote, Profile, Research) said it increased its loan loss provision for the fourth quarter to address credit quality deterioration in its wholesale mortgage and indirect auto loan portfolios.
Horizon increased its provision for loan and lease losses expense by $1.4 million and the total provision expense for the fourth quarter is now expected to be about $1.8 million, the bank holding company said in a statement.
Despite the additional charge, Horizon said it expects 2007 earings will exceed those of 2006.
(Reporting by Sweta Singh; Editing by Gopakumar Warrier)
((sweta.singh@reuters.com ; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: sweta.singh.reuters.com@reuters.net)) Keywords: HORIZONBANCORP/LOANLOSS
(C) Reuters 2007. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nWNAS5425
http://www.reuters.com/article/bankingfinancial-SP/idUSWNAS542520080102
Horizon increased its provision for loan and lease losses expense by $1.4 million and the total provision expense for the fourth quarter is now expected to be about $1.8 million, the bank holding company said in a statement.
Despite the additional charge, Horizon said it expects 2007 earings will exceed those of 2006.
(Reporting by Sweta Singh; Editing by Gopakumar Warrier)
((sweta.singh@reuters.com ; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: sweta.singh.reuters.com@reuters.net)) Keywords: HORIZONBANCORP/LOANLOSS
(C) Reuters 2007. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nWNAS5425
http://www.reuters.com/article/bankingfinancial-SP/idUSWNAS542520080102
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