Latest news with #Fitch
Mint
a day ago
- Business
- Mint
Big non-banking lenders in India are gaining trust and growing fast: Fitch Ratings
New Delhi [India], June 19 (ANI): India's non-bank financial institutions (NBFIs) are growing strongly, with large lenders leading the way, says Fitch Ratings. These institutions offer a wide range of financial services, and their credit ratings depend on how strong and stable their business models and finances are. According to Fitch, large NBFIs with a proven track record are earning more trust from investors and lenders. This growing confidence is helping them stay ahead of smaller players in the sector. By the end of September 2024, 17 major NBFIs tracked by Fitch had increased their share of the total loan market to 38 per cent, up from 30 per cent in March 2022. These leading lenders recorded an annual loan growth rate of 20 per cent during this period, much higher than the 9 per cent growth rate of the overall NBFI sector. These big NBFIs have also become financially stronger. Their debt-to-equity ratio -- a measure of how much they borrow compared to their own funds -- dropped from 4.5 times in 2021 to 4.3 times by mid-financial year 2025. This improvement came from raising more capital and keeping profits within the business, especially during the COVID-19 pandemic. Lower debt levels help reduce the risk of financial trouble if loan repayments slow down. Fitch expects this trend to continue, with most NBFIs using their earnings to fund future growth rather than paying out large dividends. Despite slower global economic growth, India's NBFI sector continues to expand. The sector includes a wide variety of companies offering different types of loans. In cities, competition is tough for secured loans like home or car loans. But in rural areas, some NBFIs face less competition from banks. However, higher costs and greater credit risks in rural lending can affect profitability, depending on how well the loans are managed. Fitch also highlights that the type of loans an NBFI focuses on plays a big role in its success. Those with deep experience and large operations in specific segments tend to have more stable and sustainable businesses. Many NBFIs lend to non-prime customers -- people who may not get easy loans from banks -- which can help them earn higher margins, unless banks enter the same market. Large NBFIs benefit from their size and strong market position. They usually have better access to funding, more control over pricing, and lower costs. Those that lead in their lending areas are better able to manage risks and stay profitable, even during economic ups and downs. Companies backed by large corporate groups may also get easier access to funds and benefit from group support.
Business Times
a day ago
- Business
- Business Times
Weaker greenback raises risk of currency mismatch for Asian insurers holding USD assets
[SINGAPORE] A mismatch between the currencies in which insurers' assets and liabilities are held can put pressure on their capital and ability to fulfil the liabilities. This is the issue currently confronting insurers in Taiwan, where the majority of assets are invested in US dollar (USD) bonds, but liabilities are in the domestic Taiwan dollar. A weaker USD has meant that the value of assets has fallen, and an insurer may need to put in additional capital or equity. The US Dollar Index has fallen by more than 8 per cent year to date. What is the likelihood that this could happen in Singapore? Based on the Monetary Authority of Singapore's (MAS) Notice 133 on the valuation and capital framework for insurers, they are allowed to use USD Treasury securities to back Singapore dollar (SGD) liabilities, 'subject to the insurer putting in place a currency swap to convert the USD payments to SGD cash flows'. Where there is no currency swap, or after it expires, the insurer must apply a 12 per cent haircut to the cash flows. For Taiwan insurers, the issue was precipitated by the weakening US dollar, which has come under pressure because of tariff uncertainty, Moody's Ratings recent downgrade of the US' credit rating and the question of its debt sustainability. The Taiwan dollar has been one of the strongest performing currencies against the USD; over two days in May it rose as much as 8 per cent. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The cost of hedging has also risen substantially, exacerbating the pressure on margins. Goldman Sachs, as cited by Bloomberg, has estimated that for every 10 per cent of Taiwan dollar appreciation, the country's insurers would incur an unrealised currency loss of US$18 billion. The predicament also reflects the dearth of domestically issued fixed income assets that insurers can invest in. In May, Fitch Ratings downgraded the outlook for Taiwan's life insurance to 'deteriorating' from 'neutral', due to 'heightened risks to insurers' earnings and capital following a recent sharp appreciation of the local currency, which has exposed insurers to significant potential losses'. About 70 per cent of insurers' invested assets are in a foreign currency, mainly USD. Fitch said about 60 to 70 per cent of the foreign currency exposure is currently hedged. 'Uncertainty over the exchange rate's trajectory remains elevated amid volatile shifts in global trade policies, particularly in the US. Exchange-rate movements may affect Taiwan life insurers' capitalisation and earnings, and the rise in exchange-rate risk could prompt strategy adjustments within the sector,' said Fitch. In Singapore, David Chua, Income Insurance's chief investment officer, said Income has a 'liability-driven approach' investing into domestic SGD government and corporate bonds, 'aligning well with our insurance liability book'. '(We) invest into both Singapore assets and non-SG assets (hedged back to SGD), and hence we run minimal currency mismatch.' AIA chief financial officer Koo Chung Chang said: 'AIA Singapore has a disciplined asset-liability management approach where liabilities are well matched by assets of appropriate duration and currency. In cases where we have USD-denominated bonds to support SGD liabilities, we always consider currency hedging in our investment process. 'AIA Singapore continues to maintain a capital adequacy ratio that is well in excess of MAS' risk-based capital framework (RBC2) requirements.' Some insurers have declined to comment. Income's Chua said: 'We currently manage currency exposure using mostly FX forward hedges to ensure our non-SGD risk is covered at all times. The use of a combination of long-term and rolling strategies helps to reduce long-term risk while managing the cost.' Meanwhile, Fitch has put five Taiwan insurers' financial strength ratings on Rating Watch Negative, to reflect 'increased risks to the insurers' capital and earnings, as well as their business risk profiles'. In Fitch's current analysis, the insurers have sufficient capital buffers to withstand a 10 per cent rise in the Taiwan dollar against the USD from the start of 2025. 'We expect the insurers to record significant losses due to the unfavourable currency movement. Rising hedging costs and a more volatile Taiwan dollar will also likely pressure their earnings. 'Foreign exchange valuation reserve, which serves as a buffer against the Taiwan dollar's rise, is likely to be exhausted for most insurers by the recent spike. This will limit companies' ability to absorb further FX losses without impacting capital levels,' said Fitch.
India Gazette
a day ago
- Business
- India Gazette
Big non-banking lenders in India are gaining trust and growing fast: Fitch Ratings
New Delhi [India], June 19 (ANI): India's non-bank financial institutions (NBFIs) are growing strongly, with large lenders leading the way, says Fitch Ratings. These institutions offer a wide range of financial services, and their credit ratings depend on how strong and stable their business models and finances are. According to Fitch, large NBFIs with a proven track record are earning more trust from investors and lenders. This growing confidence is helping them stay ahead of smaller players in the sector. By the end of September 2024, 17 major NBFIs tracked by Fitch had increased their share of the total loan market to 38 per cent, up from 30 per cent in March 2022. These leading lenders recorded an annual loan growth rate of 20 per cent during this period, much higher than the 9 per cent growth rate of the overall NBFI sector. These big NBFIs have also become financially stronger. Their debt-to-equity ratio -- a measure of how much they borrow compared to their own funds -- dropped from 4.5 times in 2021 to 4.3 times by mid-financial year 2025. This improvement came from raising more capital and keeping profits within the business, especially during the COVID-19 pandemic. Lower debt levels help reduce the risk of financial trouble if loan repayments slow down. Fitch expects this trend to continue, with most NBFIs using their earnings to fund future growth rather than paying out large dividends. Despite slower global economic growth, India's NBFI sector continues to expand. The sector includes a wide variety of companies offering different types of loans. In cities, competition is tough for secured loans like home or car loans. But in rural areas, some NBFIs face less competition from banks. However, higher costs and greater credit risks in rural lending can affect profitability, depending on how well the loans are managed. Fitch also highlights that the type of loans an NBFI focuses on plays a big role in its success. Those with deep experience and large operations in specific segments tend to have more stable and sustainable businesses. Many NBFIs lend to non-prime customers -- people who may not get easy loans from banks -- which can help them earn higher margins, unless banks enter the same market. Large NBFIs benefit from their size and strong market position. They usually have better access to funding, more control over pricing, and lower costs. Those that lead in their lending areas are better able to manage risks and stay profitable, even during economic ups and downs. Companies backed by large corporate groups may also get easier access to funds and benefit from group support. Fitch says that when it rates NBFIs, it looks at how stable their business is, how much risk they take, how strong their finances are, how easily they can raise money, and how well they follow rules. (ANI)
Arab News
a day ago
- Business
- Arab News
Jordan sees 35% rise in new company registrations in first 5 months of 2025
RIYADH: Jordan recorded an increase in company registrations during the first five months of 2025, rising by 35 percent compared to the same period in 2019 and 13 percent up on 2024. A total of 2,980 companies were registered between January and May, compared to 2,213 in the same months of 2019 and 2,635 in 2024, according to the state-run Petra news agency. The total capital associated with these newly registered companies exceeded 130 million Jordanian dinars ($183.3 million). The robust economic rebound comes after Fitch affirmed Jordan's long‑term foreign‑currency issuer default rating at 'BB‑' with a stable outlook in May, citing macroeconomic stability, progress in fiscal and economic reforms, and resilient financing sources such as a liquid banking sector. Limited liability companies represented the majority of these new businesses, with 2,158 entities accounting for 72.4 percent of the total. These firms registered a combined capital of more than 48 million dinars during the reporting period. The data also pointed to a steep drop in the number of companies that were dissolved or deregistered. Only 478 companies ceased operations between January and May. This marks an 84 percent decline compared to the 2,390 closures recorded in the same period in 2019 and a 46 percent decrease from the 878 closures registered in 2024. There was a substantial increase in the net capital growth of companies. Net capital increases between January and May stood at 727 million dinars, representing a 1,133 percent rise compared to the 85 million dinars reported in the same period of 2019. Compared to 2024, which saw net capital increases of 229 million dinars, this reflects a 293 percent growth. Petra reported that the number of companies opting to reduce their capital dropped significantly to 127 in 2025, down from 243 in 2019. Some 750 companies raised their capital during the first five months of the year, more than double the 288 capital increases registered over the same months in 2019. The data suggests a robust rebound in entrepreneurial activity and investor confidence in Jordan, reflecting broader economic stabilization and growth trends.
Yahoo
2 days ago
- Business
- Yahoo
New Fortress Energy (NFE) Falls Hard Amid Bond-Price Slump
The share price of New Fortress Energy Inc. (NASDAQ:NFE) fell by 28.06% between June 10 and June 17, 2025, putting it among the Energy Stocks that Lost the Most This Week. A cutaway view of a modern energy infrastructure and its power generation facilities. New Fortress Energy Inc. (NASDAQ:NFE) owns and operates natural gas and LNG infrastructure and an integrated fleet of ships and logistics assets to rapidly deliver turnkey energy solutions to global markets. New Fortress Energy Inc. (NASDAQ:NFE) plunged to an all-time low this week after a Bloomberg report that various creditor groups have formed amid a mounting debt crisis at the LNG company. Currently, NFE is grappling with nearly $9 billion in debt, coupled with delays in pivotal projects that have hampered its cash flow. New Fortress Energy Inc. (NASDAQ:NFE) was also late in filing its Q1 report with the SEC, citing in part a delay in the $1 billion sale of Jamaican operations that was completed last month. Moreover, in the wake of downgrades by S&P Global and Fitch, some of the company's bonds have plunged to record lows below 50 cents on the dollar recently. To make matters worse, New Fortress Energy Inc. (NASDAQ:NFE)'s financial difficulties may also delay its $1.1 billion LNG export project in northeastern Mexico, which is seen as crucial to the long-term future of the company. While we acknowledge the potential of NFE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Best Nuclear Energy Stocks to Buy Right Now and Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
