Loan growth – Calparks Mojave Tue, 26 Oct 2021 13:04:56 +0000 en-US hourly 1 Loan growth – Calparks Mojave 32 32 Slides down; Expects gold lending growth to pick up Tue, 26 Oct 2021 09:35:52 +0000

CSB Bank on Monday announced a 72 percent increase in net profit to Rs 118.57 crore in the second quarter ending in September. The Kerala-based private sector lender had reported a net profit of Rs 68.90 crore in the corresponding quarter of the previous fiscal year.

Total income in the July-September quarter of fiscal 22 reached Rs.555.64 crore, compared to Rs.513.77 crore in the previous year quarter, CSB Bank said in a regulatory filing. On the asset front, the bank’s non-performing assets (APM) stood at 4.11% of gross advances in September 2021, up from 3.04% a year ago.

In absolute terms, gross non-performing assets (NPA) stood at Rs 586.83 crore, more than Rs 387.42 crore reported in the same quarter a year ago. Net NPAs or bad debts stood at 2.63 percent (Rs 370 crore) against 1.30 percent (Rs 163.52 crore).

Regarding slippages, CVR Rajendran, chief executive officer and CEO of the company, said: “Slippages have decreased significantly compared to the first quarter, most of the slippages in the first quarter were just gold lending and the current slips. are very low. The gold loan shows around Rs 280 crore slippage as of date, which can be clawed back over the next two quarters.

He added, “As for the slippages in other loans, it’s a lot less than the turnaround we’ve done. This therefore results in a reversal of a provision that we have made for credits other than gold. So slippage in the future will decrease significantly and there will be more and more rewrites in the coming quarters. “

Regarding loan growth, Rejendran said: “The focus has been more on the recovery because last year, with a higher loan relative to asset value, the portfolio grew faster. This year, we have significantly reduced the loan to its asset value. NBFCs and others get less than asset value loans, people naturally turn to NBFCs or private lenders for those looking for more money with the same jewelry. So naturally the portfolio went down. Other than that, the focus is only on collections and not on loans. “

“Starting this quarter, you will see a pull in gold lending and gold lending growth will pick up to the same level as before. Expect around 10-15% growth in the gold loan portfolio.

Regarding the COVID situation in Kerala, Rejendran said Kerala has fully opened up, activities have resumed to normal level and there is no problem. The functioning of the courts has not yet resumed at full capacity and priority is given to the most important cases. So there is some delay in the recovery process.

For a full management commentary, watch the video.

-With PTI inputs

First publication: STI

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“Higher loan growth for private banks” Fri, 15 Oct 2021 16:07:38 +0000

Private sector banks recorded higher loan growth than other banking groups (PSBs and foreign banks), their share in total credit steadily increasing to 35.4% in March 2021 from 20.8% in March 2015 , according to the Reserve Bank of India (RBI).

This came at the expense of public sector banks, whose share in total credit rose from 71.6 percent to 56.5 percent over the same period, the central bank said.

At the end of March 2021, foreign banks held a market share of 4% (4.9 at the end of March 2015); regional rural banks (3.1% against 2.6%); and small finance banks / SFBs (1 percent). SFBs became operational from 2016. At the end of March 2021, the gross outstanding credit of programmed commercial banks (BSCs) stood at 1 10 78,050 crore (68 78,400 ₹ crore at end of March 2015).

Personal loans shine

According to the “Basic Statistical Return on Credit by Scheduled Commercial Banks in India”, personal loans have continued to grow at a sustained rate over the past decade, and their share in outstanding bank loans has increased from 16.4 % to 25.9% in March 2021. 10 years ago.

These loans recorded double-digit growth throughout the years of the interregnum. The share of personal loans in total credit stood at 24% in March 2020.

The RBI said that as the number of small loan accounts with banks has grown over the years to meet personal lending and other requirements of small borrowers, the average size of bank loan accounts has gradually decreased to meet personal lending requirements. reach 3.7 lakh in March 2021 from ₹ 4.8 lakh in March 2015.

The decline in the average amount of loans at metropolitan bank branches was more pronounced, from 13.5 lakh to 7.7 lakh during the same period.

Industrial loans

Industrial loan growth, which has slowed over the past decade, first turned negative in 2020-21 as economic activity slowed in the wake of the Covid pandemic, the RBI said. Working capital loans in the form of cash loans, overdrafts and demand loans, which accounted for a third of total loans, taken out during the period 2020-2021, the central bank said.

Working capital loans represented 31.9% of SCB outstanding credit at end-March 2021.

Interest rates on bank loans fell further in 2020-2021; the share of loans bearing interest below 9% was 60.7% in March 2021 compared to 42.1% in March 2020 and only 16.4% in March 2019, the RBI said.

The use of credit in the southern region of the country has steadily increased and its share in total credit rose to 30.1% in March 2021, against 27.5% five years earlier; it overtook the Western region, where the share of credit rose from 32.4% to 28.8% during this period.

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Growth in regional bank loans could portend healthier supply chains | Invest News Fri, 15 Oct 2021 05:22:08 +0000

NEW YORK (Reuters) – If regional banks show signs of accelerating loan growth when they report profits in the coming week, it could signal an easing of chain bottlenecks. supplies that weighed on the US economic recovery after the pandemic, analysts and investors said.

Overall, small banks accounted for 63% of the roughly $ 520 billion in loans under the federal paycheck protection program launched in response to the pandemic. The program allowed small businesses to take out loans that could be canceled or would have an interest rate of 1%, according to the US Small Business Administration 07 / PPP% 20Results% 20-% 20Sunday% 20FINAL.pdf.

The growing demand for new loans at higher interest rates could indicate that small businesses are securing their stocks and expanding, said Dave Ellison, portfolio manager at Hennessy Funds.

“It seems like everyone has benefited from the reopening of the economy, but the banks because you’ve seen very little loan growth” because of the paycheck protection program, Ellison said. “The pandemic has disproportionately affected small businesses, and these are the customers of regional banks,” he said.

As of June 30, small banks held 15% of total banking sector loans, but a disproportionate share of Paycheck Protection Program loans, at 31%, according to the Federal Deposit Insurance Corp. https://www.fdic .gov / analysis / quarterly- profil-bank / fdic-quarter / 2020-vol14-4 / fdic-v14n4-3q2020-earlyrelease.pdf.

Overall, commercial loan growth fell 12% in September from a year earlier after hitting a low with a 16.3 %% drop in annual loan growth in May, data shows. from the Federal Reserve and Oppenheimer. Still, rising inventories at auto suppliers and retailers are expected to support loan growth over the coming year, said Chris Kotowski, analyst at Oppenheimer.

“It seems likely to us that the next significant move is up – not down – for the simple reason that it can’t go down as much as it already has,” said Chris Kotowski, analyst at Oppenheimer. .

Chart: Has commercial loan growth bottomed out? –

A healthy increase in new loans to regional banks would be a strong signal that supply chain problems are moderating, said Steven Comery, analyst at Gabelli Funds.

“If customers can’t get their products to market because of the supply chain, they won’t borrow to build up their inventory,” he said. “If we see signals that supply chain issues are not going away, it will impact earnings estimates through 2023.”

The four largest U.S. banks reported mixed lending growth when releasing their results on October 14. J&P Morgan said loans were up 5% from a year earlier, while Bank of America and Wells Fargo reported declines. [L4N2R93KV]

Companies such as First Community Bancshares Inc, First Midwest Bancorp Inc and Zions Bancorp are expected to report results on Monday, while Fifth Third BancorpO> and United Community Banks Inc are among those expected to report on Tuesday.

On Wednesday, October 13, First Republic Bank shares gained 1.5% after the regional bank issued around $ 15 billion in new loans and reported that its average loan balance under the loan protection program paychecks had fallen 39% in the quarter. These gains in new loans will make it likely that the bank will raise its forecast in the coming quarters, noted Casey Haire, analyst at Jefferies.

Concerns about regional bank lending growth come at a time when sector stocks are trading near record highs. Regional banks in the S&P 500 are up nearly 37% for the year to date and are just below the peak they reached on October 8, according to data from Refinitiv.

Despite these gains, regional banks remain attractive based on valuations, Ellison said.

Regional banks in the S&P 500 are trading at a forward price-to-earnings ratio of 13.5, well below the 21.2 in the broad S&P 500, according to data from Refinitiv. Valuations will likely rise alongside the benchmark 10-year Treasury yield, which is used to set rates on loans, including mortgages, Ellison said.

“Valuation is not a problem for future earnings,” he said.

(Reporting by David Randall; editing by Megan Davies and David Gregorio)

Copyright 2021 Thomson Reuters.

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Jack Henry & Associates: Your Top 3 Loan Growth Challenges – Solved Thu, 14 Oct 2021 13:22:14 +0000

Eighteen months ago, few could have imagined the changes in our world that would occur in 2020 and 2021. The pandemic has brought the greatest challenge to the global economy since the Great Recession. This roller coaster ride has created challenges and leaders of the left bank and credit unions are wondering how to respond. What approach would achieve their goals in terms of borrower support, income generation, portfolio growth and credit quality in the years to come? There are three hurdles to overcome.

# 1 – Compression of the net interest margin

Banks and credit unions are now teeming with deposits, but the main challenge is the continued squeeze in net interest margins. From the first quarter of 2020 to the same period in 2021, the net interest margin of financial institutions with assets of less than $ 1 billion fell from 3.69% to 3.37%.

With these low margins, banks and credit unions should look for ways to promote loan growth. More loans on the books can make up some of the shortfall. The good news is that the demand for loans is high. Now that the PPP funds are exhausted, companies are again looking for financing for short and long term working capital, equipment, etc. With low interest rates and unprecedented federal support for loans to community institutions, the trick isn’t to convince consumers to borrow – it’s to win the finance race.

Along with the increase in the number of loans, there is the strategy of reducing loan management fees. Commercial loan origination software produces operational efficiency in banks and credit unions that can save between 30% and 70% on major back office workflows. Automation also allows loan officers and bankers to spend more time helping borrowers and generating inbound referrals.

# 2 – Increased competition from fintech

To win the finance race, banks and credit unions need to come up with attractive and efficient ways to get a loan. Many financial institutions lose more loans than they generate because potential borrowers abandon the long and tedious application process before they complete it.

Cornerstone Advisors reports that in a recent survey of 184 financial institutions, “more than half of organizations have lost more than 75% of potential lending activity”. They lose two accounts (or loans) for each account (or loan) opened.1 Instead, borrowers will go for a fintech that offers a straightforward process. As more and more digital banking alternatives become available, the potential for a consumer to switch to a competitor will only increase.

Bank CEOs recognize the problem. A survey carried out in 2021 among the heads of financial institutions asked the question; “What’s the biggest headwind hampering your lending success in 2021?” The second most popular response was “Meet demand for Amazon-like experiences.”2

Simplified online loan applications are not only faster and more attractive, but they increase volume by allowing borrowers to apply when it is most convenient for them.

# 3 – manage risk

Credit risk issues have arisen in the wake of the pandemic. For example, what will happen to commercial real estate when so many workers are now home based? As office leases expire, there will be adjustments in the market. Banks and credit unions currently hold nearly $ 2 trillion in commercial real estate loans. The losses could be significant for financial institutions with high concentrations of CRE loans.

One answer is to integrate loan stakes into long-term growth strategies. This provides the opportunity to complement organic growth to help meet revenue generation and credit standing goals.

General economic strains on small and medium-sized businesses in 2020 and 2021 could also challenge credit risk. For many industries, lenders must now underwrite new applications and renewals in an environment of weaker balance sheets. Community-driven institutions with the technology to manage these risks will have an advantage over others, allowing for a more diversified portfolio and revenue stream.

As P3s and other stimulus programs run their course, small business owners will once again seek financing to fund new growth. This represents an opportunity for banks and credit unions to step in, helping to finance recovery and expansion. It also gives lenders an opportunity to diversify their portfolios, which has been difficult for many during the pandemic.

When considering which sectors are likely to stimulate loan demand, it is worth paying a close eye to those who accounts receivable and inventory. While these businesses have the potential to grow, it is likely that they will need a source of short-term working capital to make this opportunity a reality. Institutions with the appetite and the right technology to handle an increase in business will be well positioned to strengthen client relationships and generate revenue.

Go forward with a sense of purpose

Through all of these challenges, bank and credit union leaders must ensure that their organizations honor the mandate to serve their communities and improve the borrower journey. Community financial institutions have a proud history of resisting problems while continuing to serve. The current context is another opportunity to show their dedication.


Jack Henry and Associates Inc. published this content on October 14, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on October 14, 2021 01:21:05 PM UTC.

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JPMorgan Earnings Surpasses Estimates on M&A Boom and Loan Growth | Money Wed, 13 Oct 2021 11:52:01 +0000

A sign outside the headquarters of JP Morgan Chase & Co in New York, September 19, 2013. – Photo Reuters

NEW YORK, October 13 – JPMorgan Chase & Co today announced a third quarter profit increase that topped estimates as the Wall Street branch of the bank benefited from a global trading boom, while that its consumer bank benefited from higher interest income on loans.

The bank, whose fortunes reflect the health of the US economy, said strength in mergers and acquisitions was offsetting a slowdown in trade. Its consumer bank also had a strong quarter as credit card spending rose and customers paid off loans at a slower pace, meaning the bank earned more interest income.

JPMorgan’s net profit reached $ 11.7 billion (RM 48.6 billion), or $ 3.74 per share, in the quarter ended September 30, from $ 9.4 billion, or 2, $ 92 per share, a year earlier.

Analysts on average expected earnings of US $ 3.00 per share, according to Refinitiv.

JPMorgan’s results were also helped in part after pulling out new reserves it had set aside during the height of the pandemic to cover loans that could potentially go bad.

Banks were forced to set aside billions last year for possible defaults during the pandemic. But consumer-friendly monetary policy and stimulus controls have boosted spending by the average American consumer and increased savings, allowing banks to free up some of their reserve capital.

Banking on Wall Street has remained strong for most of the past year, as large financial sponsors and cash-intensive companies embarked on a trading frenzy, helping to drive up bank fees. investment in Wall Street’s biggest banks at record levels.

Total reported revenue increased 1% to US $ 29.65 billion in the quarter.

However, trading income has taken a hit this year, having benefited from volatile financial markets during the peak of the pandemic last year.

Other major US banks, including Bank of America, Citigroup, Wells Fargo and Morgan Stanley, will report their results tomorrow, while Goldman Sachs, Wall Street’s top investment bank, will close the earnings season on Friday. – Reuters

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(LEAD) Growth in bank lending to households accelerates in September despite tightening of lending rules Wed, 13 Oct 2021 05:56:13 +0000

(ATTN: RECAST title, ADDS BOK manager’s comments to paragraphs 5-6)

SEOUL, Oct. 13 (Yonhap) – Household loans from South Korean banks grew at a faster pace in September compared to the previous month, despite tightened government controls on lending, according to bank data central this Wednesday.

According to the Bank of Korea (BOK), outstanding household bank loans stood at 1,052.7 trillion won ($ 877.9 billion) at the end of September, up 6.5 trillion won per year. compared to the previous month.

The figure is higher than an increase of 6.1 trillion won in August, according to the data. The reading also marked the second largest monthly expansion for September since the relevant data began to be compiled in 2004.

The increase is attributable to an increase in unsecured bank loans and other non-mortgage loans, which rose 800 billion won from the previous month, the data showed.

“An upward trend in line with what was reported in August continued due to demand for home purchase loans and ‘jeonse’,” a BOK official said.

Jeonse refers to a unique home rental system in South Korea in which tenants pay a large sum of money as a deposit instead of paying a monthly fee.

Mortgages stood at 769.8 trillion won in September, up 5.7 trillion won from the previous month. The figure was down slightly from an increase of 5.8 trillion won a month earlier.

The surge in household lending in September came despite tightened government lending regulations, amid concerns that household debt was spiraling out of control and undermining economic growth.

On Tuesday, the BOK kept its key rate unchanged at 0.75% for October, but hinted at another rate hike before the end of this year after a quarter-percentage point hike in August in the goal curb inflation and household debt.

At the same time, bank loans to businesses stood at 1,049 trillion won at the end of September, up 7.7 trillion won from the previous month. Growth was slightly lower than the 7.9 trillion won recorded in August.

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American banks: desired loan growth Mon, 11 Oct 2021 06:13:34 +0000

Wall Street banks have shown over the past 18 months that they can thrive in good times and bad times. Their traders have benefited from spikes in trading volume during chaotic times. When the economy was struggling, bankers collected commissions for helping businesses raise funds. As the economic recovery takes hold, the same bankers are advising companies looking to go public or make acquisitions.

The third trimester will be no different. Strong investment banking income is expected to compensate for the slowdown again after the pandemic-era business boom. Expect more loan loss reserves to be released to support earnings, but less than in the previous two quarters. Big banks are expected to achieve a 20% year-on-year increase in earnings per share, analysts at Wells Fargo believe.

Still, markets have already factored in expectations of strong earnings in the third quarter. The KBW Bank Index has climbed 72% in the past 12 months, well ahead of the S&P 500’s 28%. Morgan Stanley and Goldman Sachs – the two largest independent investment banks on Wall Street – have done even better, roughly doubling their value. At around 1.9 times the tangible pounds, the sector is trading close to five-year highs.

Investors may well ignore the earnings figures, as the banks are reporting this week. Instead, they should focus on loan growth and any direction for the business on its future trajectory.

Major U.S. lenders saw their loan portfolios shrink in 2020 for the first time in more than a decade, as Americans used stimulus funds to pay off debt and corporations issued bonds instead of taking loans .

Credit activity has remained depressed this year. Weighted average loan growth at large-cap banks fell 7% in the second quarter and is expected to decline another 2% year-on-year in the third quarter, according to Morgan Stanley.

For banks, which are inundated with deposits, the lack of lending opportunities reduces net interest margins. These fell to an all-time high of 2.5 percent during the second trimester.

Some may argue that trading and investment banking income has peaked. Yet banks still have room to increase profitability the old-fashioned way, the traditional bank. Citigroup stands out as the most affordable bank stock because it trades at 0.8 times its book value, the lowest multiple among the six mega-banks. Any sign that loan growth has reached an inflection point should provide it and other retail banks with a catalyst for a further rise in the share price.

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U.S. Banks Third Quarter Results Snapshot Reaching Loan Growth Deal Fri, 08 Oct 2021 11:38:22 +0000

Profits of US banks in Q3

Bank stocks have posted strong gains throughout the year so far, significantly outperforming the S&P. Whether stocks can extend these gains further depends on what third quarter earnings tell us.

What to watch:

Loan growth

The prospect of an interest rate hike by the Fed as soon as possible has been closely watched by the markets. A rate hike would be good news for banks’ net interest income. Such a move would widen the NII margin, helping to explain why banks have overtaken the market at large. However, with companies issuing bonds and consumers making the most of their stimulus money to pay off their credit cards, banks have struggled to increase lending.

Capital market performance

Underwriting in the capital market, a boom in mergers and acquisitions and the closing of record deals are expected to boost revenue streams at the banks that dominate this field, namely JP Morgan and Goldman Sachs.


Throughout the pandemic, banks have written off huge sums for bad debt reserves. Bad debts never materialized to the extent initially expected thanks to budgetary and monetary support. In the last quarter, the banks released some of these reserves, inflating profits. It could happen again this quarter.

Look more closely:

JP Morgan Chase – October 13e

Back in the second quarter, JPM beat revenue and profit expectations. However, he was still waiting for loan growth to show significant signs of recovery, a fairly important point for the United States’ largest lender. The bank also lowered its NII forecast, but the investment bank had a record quarter. Investors will be looking to see if the investment bank stays in the red and if there are stronger growth signs from loan growth and NII. His diversification and strong track record serve him well. Expectations are EPS of $ 2.99 for revenue of $ 29.7 billion. The whisper number is $ 3.19.

What next for the JP Morgan share price?

JP Morgan recovered early in the year but remained relatively subdued for most of 2021. The price was capped down $ 145 and up by $ 165. The price recently burst higher, with buyers targeting new all-time highs. The RSI favors further gains as it stays out of overbought territory. It would take a move below $ 160 to reverse the short-term uptrend.

Wells fargo

October 14e

Wells Fargo has underperformed its peers in recent years. It is the most sensitive bank to interest rates. It is also the best performing bank so far this year, growing 59% since the start of the year. However, the results are likely to be influenced by the amounts spent to comply with orders from regulators to improve control and risk management systems. Expectations are EPS of $ 1.04 for revenue of $ 18.46 billion. The whisper number is $ 1.04.

What’s next for the Wells Fargo share price?

The Wells Fargo stock price is trading in an uptrend, above its ascending trendline dating back to November of last year. The recent rally in the sma 50 combined with a bullish RSI keeps buyers bullish on further gains. A move above $ 49.85 could bring $ 51.40 back into play and new all-time highs. It would take a move below $ 43.46 for sellers to gain momentum towards the 200 sma at $ 41.91.

Wells Fargo Chart

Bank of America – October 14e

Bank of America is also well positioned to take advantage of rising interest rates. Lending will be a priority after lending stops in the second quarter due to low interest rates and a declining loan portfolio. The expected 35% increase in the bank’s profits may well be due to lower provisions for bad debts and a rise in the NII. The share price has risen 46% so far this year. Expectations are EPS of $ 0.70 on revenue of $ 21.66 billion. The whisper number is $ 0.82.

What’s next for the Bank of America share price?

After rising sharply at the start of the year, the Bank of America stock price consolidated in the second and third quarters in a continuation pattern capped up at $ 43.50 and down at $ 43.50. $ 37.50. Just recently, the price has burst higher, trading at 13-year highs. Optimistic numbers and forecasts could see $ 50 a round figure and a level last seen in 2007 fall on target. During this time, one would have to go below $ 41.20 per sma 50 to reverse the short-term uptrend. While a move below $ 37.50 could see sellers gaining ground.

Bank of America chart

Citigroup – October 14e

Citigroup’s share price has underperformed its banking peers, rising just 20% year-to-date. Although it still surpasses the S&P at large. This year, Jane Fraser became Citigroup’s first female CEO and the leadership transition could be welcome news. Any update on strategic positioning will be the focus of attention in addition to the growth of the loan portfolio, particularly following the decline in revenues recorded in the second quarter. Citigroup reported a 12% drop in total revenue in the second quarter and loans were down 3% from the previous year. Investors are hoping to see improvement here. Expectations are EPS of $ 1.73 on revenue of $ 17.01 billion. The whisper number is $ 2.14.

What next for the Citigroup share price?

The share price has hovered around $ 70 over the past 4 months. More recently, after bouncing off $ 66 from September’s low, Citigroup stock price extended its gains above 50 and 200 sma. The RSI is slightly bullish. Buyers could look for a move above $ 74.75 to target $ 80. A move below 200 sma to $ 70 could lead to a bigger sell off towards $ 66, the September low.

Citigroup chart

Goldman Sachs – October 15e

Goldman Sach is expected to benefit from higher merger and acquisition costs amid the biggest global trading boom on record. Global mergers and acquisitions hit an all-time high in the third quarter as cheap financings sparked the desire to close deals. Expectations are EPS of $ 9.70 on revenue of $ 11.52 billion. The whispered figure of $ 12.34.

What’s next for the Goldman Sachs share price?

Goldman Sachs share price is attempting to recover the 50 sma after double bottoming at 370. A move above the 50 sma and horizontal resistance of $ 404 could lead to further gains towards $ 420 and new all time highs . A move below $ 370 could see sellers gaining ground towards the 200 sma at $ 350.

Goldman Sachs

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Lots of loan growth for Plenti Thu, 23 Sep 2021 03:08:28 +0000

This story introduces PLENTI GROUP LIMITED. For more information SHARE ANALYSIS: PLT

Non-bank lender Plenti Group stands out, paving the way for FinTech sector as it approaches $ 1 billion loan portfolio

-Credit quality has improved with the shift to secured auto loans and domestic renewables
-Warehouse facilities significantly reduce financing costs
-Increased consumer interest has improved credit score and risk score

By Eva Brocklehurst

Lending money is the raison d’être of Plenti Group ((PLT)), having experienced substantial growth in original loans in the automotive sector, renewables and personal finance. The advice has been very well received and will be closely watched by brokers as it includes achieving a net profit by June 2022 and a $ 1 billion loan portfolio by March 2022.

If these ambitions are realized, Plenti Group will be the first fintech lender to do so, says Bell Potter, while Moelis notes a $ 1 billion loan portfolio would represent around 1% of the consumer loan market. The company has also set a target of reducing its cost / income ratio to 35%, compared to 55% in FY21.

Plenti Group improved its credit standing by switching to secured auto loans and household renewables and moving away from unsecured personal loans. The increased use of warehouse finance has also reduced the costs of issuing new loans.

The main growth opportunities envisioned are the new commercial automotive portfolio, the expansion of renewable energy lending, and the cross-selling of products and services to existing customers, and the company appears well positioned to meet the demand for automotive financing. which should occur once the blockages are lifted. .

Warehouses have been set up with national institutions which considerably reduce financing costs. Moelis expects margins to increase as financing costs are recalculated under the new warehouse structure (increased to $ 450 million from $ 350 million) and costs are amortized over the duration of the loan portfolio.

The broker, initiating a hedge with a buy rating and a target of $ 1.93, predicts that funding costs will be reduced to 3.0% from 5.7% and cash margins will increase to 1. , 3% instead of 1.5%. All from here FY24.

Bell Potter points out that the lack of senior bank wholesale debt issues has led to increased demand for securitization issues in both RMBS (residential mortgage backed securities) and ABS (asset backed securities). The broker assesses that accelerating the loan portfolio will in turn increase profitability and maintain a buy rating with a target of $ 1.85.

Wilsons agrees that the $ 1 billion loan portfolio will be a catalyst, as will the first month of break-even and a second securitization deal. Plenti Group’s recent ABS transaction set the standard for other transactions, requiring only 0.5% equity financing, which will improve cash flow returns.

Additionally, the deal’s price appears to be higher, given that Moody’s preliminary ratings suggest the price could be up to 100 basis points better than expected.

The broker, who maintains an overweight rating and a target of $ 1.75, notes that the Plenti Group has been able to attract considerable consumer interest in recent years and subsequently improve its average credit score. and its risk rating.

The company’s first quarter (year ending March) was a record in terms of origination and gross lending and Shaw and Partners believes the market is underestimating the current execution rate. The broker is considering multiples of the current stock price over the medium term if the company can achieve its growth ambitions and maintains a buy rating and a target of $ 1.90.

Shaw and Partners calculates that the June execution rate, in terms of origination and current loan portfolio size, when combined with estimates of yield, repayment rate and costs, suggests a portfolio scale of loans of $ 1.8 billion (excluding any increase in fixtures), and over $ 180 million in sales and $ 40 million in net income.

Moelis also expects the stock to reassess as key milestones are reached, even despite the potential for pandemic disruption in the second quarter, and stresses that the main catalysts are the new securitization deals and the renegotiation of securities. storage conditions. The main risks revolve around competitive pressure on prices and macroeconomic factors such as financing costs or rising unemployment.

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Expect lending growth of 18-20% in FY 22; Affordable real estate segment to stimulate demand: Can Fin Homes Tue, 07 Sep 2021 07:00:00 +0000 Can Fin Homes Managing Director and CEO Girish Kousgi expects the real estate industry to perform well, which will be positive for housing finance companies. He believes the affordable segment would see huge demand first, followed by the mid-segment, then luxury, and finally high-end.

Housing finance company Can Fin Homes expects second quarter of fiscal 2022 to be its best in earnings history, beating Q4FY21 due to strong demand across all geographies and segments .

Speaking to CNBC-TV18, Girish Kousgi, managing director and CEO of Can Fin Homes, said he expects loan growth of 18-20% for fiscal 22.

“In terms of the outlook for the industry, the next 2-3 years are going to be a dream race. And because of COVID-19, wave one and wave two, there was pent-up demand that is being postponed. strong pent-up demand, then real demand will come back. So in terms of outlook, as a company, we are looking forward to growing around 18-20%, “Kousgi said.

According to him, the real estate sector will behave well in this area, which will be positive for housing finance companies. He thinks the affordable segment would see huge demand first, followed by the mid-segment, then luxury and finally the high-end.

“That’s what we’ve seen over the past few decades whenever these kinds of events happened, or there was a recession. So now we’ve seen affordable prices and the midsize segment is doing extremely. well. The next level, the high segment started to do well, ”Kousgi said.

“The real estate industry has started to do well and will last for the next 5-6 years. This will therefore ensure that, sooner or later, in all segments, this industry will do well, which will also help housing finance companies as long as they are able to maintain their liquidity and profitability, ”he said. he adds.

For the full management interview, watch the video

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