Latest news with #FinancialStability
Bloomberg
18 hours ago
- Business
- Bloomberg
BOE's Lombardelli on Rate Cut, Labor Market, Inflation
00:00 We've had the decision from the MPC to keep interest rates unchanged by a margin of 6 to 3, a bit closer than some had expected. Just take us through the thinking there. So we decided to hold rates at 4.25%. Today, we have been able to cut rates four times over the last year. But given the uncertainty facing the economy, we decided to hold at this event. And one of those uncertainties, of course, are the unfolding events in the Middle East and the impact that could have on the oil price. At what point would that become a concern to you? And have there been conversations with the government, for example, on the unfolding crisis and what it could mean? So the events in the Middle East are tragic and they are deeply worrying. As you would expect, we are monitoring carefully those events and the impact that those will have. We've seen oil prices, for example, increase since the attacks. But we are thinking about and focused on the impact for UK inflation. And so we're monitoring and carefully assessing those events. And has there been any conversations with government in terms of thinking about the impacts that could be in the actions that might need to be taken? There's been no specific conversations about the impacts for monetary stability or financial stability. I mean, you've had a lot to consider at this meeting. And one of the things that is front and center in the in the government's quote as well is the changes in the labour market. And when we look at your agents survey, some of them are quite explicit about how this links to policy changes in the government, national Insurance exchange, etc.. To your mind, what's behind the current weakening of the labour market, the slowing of wage growth? How much of it is down to things like National Insurance and National Living Wage? And how does that tell you with your expectations? So we are seeing some poor weakening in the labour market. I mean, this is in line with what we expected and actually quite similar to what we set out in our latest monetary policy report in May. But it is important that we consider those changes. We factor them in. The questions for us all, to what extent that weakening in the labour market will feed through into the prices that people are paying. And there seems to be less pass through in terms of prices, but more of a burden going on to wage growth is like that. There's lots of factors that are changing in the labour market. We are seeing some pass through to prices, we are seeing some pass through to wages. We're also seeing some adjustment of margins and some changes to employment intentions. So you take those together and we're monitoring that carefully. And as you say, our agents around the country talking to a lot of businesses about how they are responding to all the changes that they're seeing in prices across across their businesses. And it's quite an issue. We've got quite weak growth outlook built in to your forecast. And it sounds like more you're saying the underlying pattern is still pretty stagnant. Yeah, we've got growth returning and increasing next year and beyond. So we do see sort of growth increasing, but it is at low, low rates relative to historical standards. Now, six weeks is a long time. A lot can change. But as things stand at the moment, markets are expecting you to cut interest rates come August. Does that seem like a likely scenario? We will decide interest rates in August, in six weeks time. I'm not going to predict what it is we're going to do. We have said that we expect interest rates to be on a gradually downward path in general. But of course we need to be careful and think about all of the factors playing in. I mean, inflation is still too high and that is painful for people. And services, inflation particular points for them. Yet we've seen a rise in the number of elements of inflation. Actually, you're right, services inflation is proving to be quite sticky. But we've also seen recent rises in energy prices, other regulated prices like transport, like phones and of course food prices have risen as well. And all of that, taken together, is obviously difficult for people.
Reuters
a day ago
- Business
- Reuters
South African rand slips as risk appetite wanes, focus on central bank review
JOHANNESBURG, June 19 (Reuters) - The rand weakened in early trade on Thursday, weighed down by risk-off sentiment as the Iran-Israel conflict continued into a seventh day and as investors awaited the South African Reserve Bank's (SARB) Financial Stability Review. At 0651 GMT, the rand traded at 18.1075 against the U.S. dollar , roughly down 0.5% on Wednesday's close, and at it's lowest level in a month. This was in line with other emerging market peers as investors fled to safe haven assets while weighing the possibility of U.S. involvement in the Iran-Israel conflict. Later on Thursday, domestic investor attention will shift to the central bank's June Financial Stability Review, in which it evaluates risks to the country's financial stability and outlines the policy actions taken to mitigate them. Last month, the SARB cut its main lending rate, but stressed that U.S. President Donald Trump's trade war and elevated uncertainty were likely to pose risks. South Africa's benchmark 2035 government bond was weaker in early deals, with the yield rising 4 basis points to 10.16%.
Time of India
09-06-2025
- Business
- Time of India
Opinion: From credit access to credit success - How Bharat can fare better
Rural India i.e. Bharat, is at a crossroad and needs to prioritise on a borrower-first lens. (AI image) By Mayur Modi Rural India i.e. Bharat, is at a crossroad and needs to prioritise on a borrower-first lens. Underlying trends indicate such a strategy would ensure rural and retail credit systems focus on income generation as well as lifecycle engagement. An uptick in delinquencies has caused concerns across all sub-sectors of Indian financial markets. According to data from TransUnion CIBIL, delinquency rate for small-ticket personal loans touched 5.4% in early 2024. Rural districts contributed a disproportionate share of this stress. The RBI's Financial Stability report for December 2024 too had raised concerns about rising delinquencies in the micro-finance sector. Several newspaper reports have highlighted the concerns of rising delinquencies and several of these reports have indicated even private banks witnessing a spurt in loans turning sour. Pitfalls of High-Velocity Credit Expansion A great degree of thought has gone into volume-led financial inclusion, however such a phase of stress is a sobering reminder on why inclusion without prudence is never sustainable. Over the past decade, India's push for financial deepening has been commendable. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Switch to UnionBank Rewards Card UnionBank Credit Card Apply Now Undo NBFCs, fintechs, and MFIs played a crucial role in expanding credit access to underserved geographies. However, the growth model leaned heavily on speed—fast approvals, thin credit filters, and a reliance on digital data proxies rather than real-world cash flows. Such a model worked in stable conditions, but rural borrowers are particularly vulnerable to cyclical and economic shocks of inflation, climate events, and even medical emergencies. With little to no financial buffers, repayment chains are brittle to the vagaries of life. What's missing is the foundational principle we apply in corporate finance: lending should be backed by revenue visibility and viability. If corporate loans can be underwritten with strict scrutiny and thorough assessments, why not retail and rural products such as personal loans, credit cards, and even SME loans? Many lenders have systems in place to assess a borrower's ability, but often the need to comply with steep targets results in dilution of qualitative risk assessment frameworks. Setting a borrower-first philosophy Be it rural or urban lending, the loan documentation process involves KYC (Know Your Customer) processes and strict rigour. To lenders, however, it should not only be about knowing the 'known' but also attempting to know the 'unknowns' with their borrowers. With KYC processes, borrowers generally learn about the borrower's residence, income and personal details. But more data provides newer and more relevant dimensions. An example could be farm-loans where lenders assessing underwriting a loan where productive assets such as motor pumps, livestock, agro-inputs, or other equipment could be considered a secure or quasi-secured credit rather than a personal loan. That is because productive assets generate cash flow which in turn enhances repayment ability. Second, risk assessment becomes critical when dealing in largely heterogeneous geographies. In such cases, digital credit scores are useful, but insufficient because availability of data is over-hyped in the rural hinterlands. Operating in such geographies necessitates processes such as on-ground verification, household-level surveys, and even community references which can help build a more accurate picture. When it comes to SME lending, a lender does more than just rely on a promoter's reputation. A lot can be done even after a loan gets disbursed. Post-disbursal engagement could mean guidance for borrowers or even periodic review of loan accounts. Such exercises will not only produce reliable data for a lender but also instill confidence among rural customers. Building an ecosystem: From product to partnership A borrower-first model also demands a shift in how products are designed and supported. Repayment terms, for instance, could reflect income realities. Rural loans including farm/agri loans often involve the vagaries of seasonal variability. So, expecting them to service monthly EMIs can at times be unrealistic. Repayment schedules aligned to harvest cycles or business cash flows could therefore significantly improve repayment discipline. Insurance is another critical lever. Bundling credit with simple, claim-efficient protection—whether health, life, or crop insurance—can help preserve repayment capacity during unforeseen events. Moreover, data sharing and cross-institution coordination can play a transformative role. If borrowers are offered pre-approved top-ups or restructuring options based on performance—similar to MSME credit enhancement frameworks—it builds trust and prevents default escalation. The most important shift could be in how we measure success. Today, credit penetration is measured by disbursal volumes. In a borrower-first world, we could measure impact— for instance, how many loans resulted in income gains? Or, business creation or financial stability. Such an ecosystem is welcoming of banks, NBFCs, Fintechs, and the regulators. Ultimately it is the culmination of strong people-processes aligned with right digital infrastructure that we can make banking work for all, especially in the rural markets. While delinquencies are concerning, India's rural credit market is at a crossroad. We can continue to expand credit mechanically and risk future waves of default. Or we can recalibrate, placing the borrower at the centre, and build a model of lending that is resilient, responsible, and regenerative. The principles of good lending should ideally not change with ticket size. So, let us know our borrowers - slightly more than what the process mandates; and treat lending as more than just a transaction. The author is Co-founder & Co-CEO, Moneyboxx Finance Limited Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Zawya
04-06-2025
- Business
- Zawya
Dubai-listed Al Salam Bank's AT 1 issuance raises $450mln
Al Salam Bank, a Shariah-compliant bank based in Bahrain, has raised $450 million in its Additional Tier 1 (AT1) capital issuance. The private placement drew substantial demand from investors in the region and overseas despite global market volatility, the company, which is dual-listed on the Bahrain Bourse and Dubai Financial Market (DFM), said on Tuesday. 'The overwhelming response to our USD 450 million AT1 capital issuance is a testament to Al Salam Bank's financial stability, market credibility and strategic direction,' said Rafik Nayed, Group CEO of Al Salam Bank and Managing Director of ASB Capital. Al Salam's investment banking arm, ASB Capital was mandated to advise and structure the issuance. The offering is part of the company's strategy to strengthen its capital base and support future growth plans. The company also looks to boost its position as a diversified financial group in the region. Since 2020, Al Salam has consistently increased its total equity by more than 65%, according to Nayed. (Writing by Cleofe Maceda; editing by Seban Scaria)
Bloomberg
22-05-2025
- Business
- Bloomberg
In Full: ECB's Guindos on Inflation, Financial Stability
European Central Bank Vice President Luis de Guindos discusses the ECB's Financial Stability Review, in which it warned that heightened investor concern over the riskiness of US assets could further jolt the world's financial system. Talking with Bloomberg's Alexander Weber on May 22 in Frankfurt, Guindos also comments on the outlook for inflation, monetary policy and the euro-zone economy. (Source: Bloomberg)
