|NCRC Global: U.S. subprime fall-out even in Africa: fewer loans, but mergers continue, Citi grows in India, lays-off in UK
|NOTE: the impacts of the
U.S. subprime implosion continue to spread, including in Africa, where as reflected below, lending is decreasing (but unlike in the U.S. right now, mergers continue). Meanwhile, Citigroup for example has re-affirmed its commitment to consumer finance in emerging markets like India, see below, while it has laid off subprime employees in the UK -- by conference call...
Matthew Lee, Esq., Executive Director
Inner City Press / Fair Finance Watch
NCRC Board member - Global -
U.S. Tel: 718-716-3540 - E-mail: MLee@innercitypress.org
Copyright 2008 Times Media Limited
All Rights Reserved
Business Day (South Africa)
May 09, 2008
Business Day Edition
SECTION: ECONOMY, BUSINESS & FINANCE; Pg. 15
LENGTH: 523 words
HEADLINE: Finbond originating fewer mortgages
BYLINE: Nick Wilson
Finbond originating fewer mortgages
As National Credit Act takes its toll on home loans, lender plugs gap with
THE National Credit Act, and the fact that banks are declining larger
numbers of mortgage applications, has resulted in significantly fewer
mortgage originations in the market.
Willie van Aardt, CEO of mortgage origination and consumer finance company
Finbond, said this week that more loans were being declined because
consumers did not pass banks' credit criteria under the act, which came into
force in June last year.
Van Aardt said the global subprime and liquidity crises facing international
banks had also influenced local banks, which were introducing even stricter
credit criteria and "behaving more cautiously".
Before the act, Finbond said 37% of its mortgage applications were declined
by the four big banks. After the legislation and for the balance of last
year, 42% were declined. Van Aardt said this year 45% had been declined.
Finbond, which released its financial results for the year to February on
Tuesday, said the group had seen mortgage origination volumes shrink by as
much as 40% towards the end of last year.
Finbond still managed strong results, however, achieving an operating profit
6,9% above its forecast, but Van Aardt said this was due largely to the fact
that Finbond had diversified strongly into the consumer finance market.
When Finbond first listed on AltX in June last year, the contribution of
mortgage origination and related activity to net profit after tax was about
70%, with consumer finance contributing 30%.
Since then the company has expanded into consumer financing, with the result
that mortgage origination and related activities contributed 45,5% to net
profit after tax for the year to February, with consumer finance
Mortgage origination and financial services intermediary ooba, formerly
Mortgage SA, said on Tuesday mortgage origination volumes in the market had
dropped more than 30% since the act came into force.
CEO Saul Geffen said the interest rate hike in June last year coincided with
the act and had been "the tipping point".
"As interest rates have continued to climb and affordability negatively
impacted, it's got worse," Geffen said.
He said ooba's statistics showed that declines of mortgage applications by
banks for credit and affordability reasons had risen 50% since the act.
"The increase in the number of nonperforming loans on banks' books and their
capital constraints because of the credit crisis mean stricter credit
criteria," he said.
Geffen said that across the mortgage origination market, there had probably
been a 10% increase in declines by banks of mortgage applications since
Jan Kleynhans, CEO of First National Bank Home Loans, said that in the past
two or three years higher interest rates had led to a substantial increase
in defaults on debts.
He said the act was preventing consumers from becoming overindebted.
"This is not just true of mortgage lending, its true of all lending," said
"The banks are just doing their job of ensuring that people do not take on
debt they can't afford."
LOAD-DATE: May 9, 2008
Copyright 2008 T.A.B. International Pte Ltd.
All Rights Reserved
The Asian Banker Journal
April 30, 2008
LENGTH: 1658 words
HEADLINE: News & Analysis
South Africa: Absa to buy into Woolworth Financial Services
South Africa's largest retail bank, Absa Group, said it has agreed to buy a
controlling interest in retailer Woolworths Holdings' financial services
unit for 875 million rand ($110.8 million). Absa will buy 50 percent plus
one share in Woolworths Financial Services, which it said will help it
increase its share of the consumer finance market in South Africa.
Woolworths' financial unit manages a store card, personal loans, Visa credit
card and selected insurance products.
Copyright 2008 Financial Times Information
All Rights Reserved
Global News Wire - Asia Africa Intelligence Wire
Copyright 2008 Informatics (India) Ltd, Source: The Financial Times Limited
India Business Insight
May 8, 2008 Thursday
LENGTH: 51 words
HEADLINE: CITI INDIA NOT TO SELL ANY ARM (IT WOULD RATHER STRENGTHEN
PRESENCE IN THE COUNTRY)
Citi India has ruled out closing down any of its divisions in the country
and says that it would rather strengthen its presence here. The company says
that it has made investments of over Rs400 crore in 2007-2008. Citi India
says that the consumer finance business is growing at the rate of 25-30
LOAD-DATE: May 12, 2008
||NCRC - Matthew Lee
Created: 25/05/08. Last changed: 25/05/08.
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