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China Commercial Credit Announces 2013 Results

WUJIANG, CHINA–(Marketwired – Mar 31, 2014) – China Commercial Credit, Inc. (NASDAQ: CCCR)

Net income of $7,704,970 on revenue of $12,541,075. Year-end cash position of $9,405,865 vs. $1,588,061 at year-end 2012. Loan capacity expanded with approval of IPO proceeds as contributed registered capital. Total Shareholders’ Equity at $84,949,906 versus $67,249,079 at year-end 2012.

China Commercial Credit, Inc. (NASDAQ: CCCR), a microfinance company whose current major business is providing microcredit loans and loan guarantees to small-to-medium enterprises (SMEs), farmers and individuals in Jiangsu Province, today reported that, for the year ended December 31, 2013, the company had net revenue of $12,541,075 compared to net revenue of $12,586,724 in 2012.

Net income for the year ended December 31, 2013 was $7,704,970, or $.81 per share, on total average shares outstanding of 9,535,161. This compares to net income of $8,312,469, or $1.04 per share, on total average shares outstanding of 7,960,662 in the prior year period. Accounting for non-cash expenses of $752,500 related to the conversion of Series A and B Preferred Shares at the closing of the company’s IPO in August 2013, net income attributable to common stock shareholders was $6,952,470 for the year ended 2013 vs. $8,312,469 for the year ended 2012.

The decrease in 2013 net income compared to 2012 was primarily the result of an increase in total non interest expenses of $733,448, the majority of which comprised various travel expenses and legal and consulting costs. The 2013 net income was also negatively impacted by an increase in the provision for loan losses of $399,034, a charge assessed to reflect the added risk associated with the company’s increase in loan receivables of approximately $4.4 million, to $90,203,413 in 2013 from $85,781,293 in 2012.

The company’s cash position was $9,405,865 as of December 31, 2013, compared to $1,588,061 at year-end 2012. It included net IPO proceeds of $7.6 million, of which approximately $5.6 million has been approved by relevant government authorities as contributed registered capital to the company’s operating entity as of the end of Q1 2014. Therefore, as of April 1, 2014, such funds can be used to expand the company’s lending and guarantee capacity going forward.

Total Shareholders’ Equity at year-end 2013 increased to $84,949,906 from $67,249,079 at year-end 2012.

“While net income fell moderately in 2013, we anticipate improved operating results in the current year based on an improved cash and registered capital base for expanding our microcredit lending and guarantee business, as well as contributions from our three new ventures anticipated for launch in 2014,” said CEO and founder Mr. Huichun Qin. These ventures include a loan guarantee service for applicants on the Jiangsu Financial Bureau’s Internet-based lending platform, utilized by thousands of SMEs, farmers and individuals in Jiangsu Province; and Pride Financial Leasing, designed to offer leases on machinery and equipment, transportation vehicles, and medical devices to municipal government agencies, hospitals and SMEs in Jiangsu Province and beyond; and Pride Lending Club, an online loan portal pairing prospective borrowers with willing lenders and loan guarantors throughout China.

The company’s 2013 annual report on Form 10-K will be available online at or by visiting the investor relations section of the China Commercial Credit website at

About China Commercial Credit

China Commercial Credit (, founded in 2008, provides business loans and loan guarantee services to more than 280 small-to-medium enterprises (SMEs), farmers and individuals in China’s Jiangsu Province. Due to recent legislation and banking reform in China, these SMEs, farmers and individuals — which historically had been excluded from borrowing funds from State-owned and commercial banks — are now able to borrow money at competitive rates from microfinance lenders. According to 2012 data, SMEs account for eight of ten jobs in China and comprise nearly 60 percent of the nation’s GDP.

Investors wishing to receive CCC’s corporate communications as they become available may go to and register under Email Alerts. The company’s blog, “From The CEO,” also appears at the same site. Each new blog post will be announced on the company’s Twitter account, @CCCR_update, where readers may link directly to the post.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of United States securities laws. You should not rely upon forward-looking statements as predictions of future events. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations. You should review the factors described in the section entitled “Risk Factors” in our prospectus filed with the SEC on August 14, 2013 and other documents we file from time to time with the SEC. We qualify all of our forward-looking statements by these cautionary statements.

Results of Operations Year Ended December 31, 2013 as Compared to the Year Ended December 31, 2012
For the Years Ended 2013 2012 Interest income Interests and fees on loans $ 12,223,803 $ 12,003,158 Interests and fees on loans-related party – 13,119 Interests on deposits with banks 220,820 272,782 Total interest and fees income 12,444,623 12,289,059 Interest expense Interest expense on short-term bank loans (1,143,217 ) (1,298,081 ) Net interest income 11,301,406 10,990,978 Provision for loan losses (484,069 ) (85,035 ) Net interest income after provision for loan losses 10,817,337 10,905,943 Commissions and fees on financial guarantee services 1,407,699 1,667,067 Over provision on financial guarantee services 316,039 13,714 Commission and fees on guarantee services, net 1,723,738 1,680,781 Net Revenue 12,541,075 12,586,724 Non-interest income Government incentive 143,051 188,146 Other non-interest income 25,830 135,831 Total non-interest income 168,881 323,977 Non-interest expense Salaries and employee surcharge (1,047,589 ) (1,052,199 ) Rental expenses (259,748 ) (254,921 ) Business taxes and surcharge (499,075 ) (472,216 ) Other operating expenses (1,818,302 ) (1,111,930 ) Total non-interest expense (3,624,714 ) (2,891,266 ) Income Before Taxes 9,085,242 10,019,435 Income tax expense (1,380,272 ) (1,706,966 ) Net Income 7,704,970 8,312,469 Amortization of beneficial conversion feature relating to convertible Series A Preferred Stocks (372,500 ) – Amortization of beneficial conversion feature relating to convertible Series B Preferred Stocks (380,000 ) – Net income attributable to Common Stock shareholders $ 6,952,470 $ 8,312,469 Earnings per Share- Basic and Diluted $ 0.808 $ 1.044 Weighted Average Shares Outstanding-Basic and Diluted 9,535,161 7,960,662 Net Income 7,704,970 8,312,469 Other comprehensive income Foreign currency translation adjustment 2,280,218 471,501 Comprehensive Income $ 9,985,188 $ 8,783,970 Consolidated Balance Sheets
December 31 2013 2012 ASSETS Cash $ 9,405,865 $ 1,588,061 Restricted cash 10,784,960 11,595,489 Loans receivable, net of allowance for loan losses $1,375,948 and $857,813 for December 31, 2013 and 2012, respectively 88,827,465 84,923,480 Interest receivable 1,124,734 905,454 Tax receivable, net 820,526 – Property and equipment, net 254,795 302,626 Other assets 1,785,103 689,709 Total Assets $ 113,003,448 $ 100,004,819 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Short-term bank loans $ 16,360,721 $ 20,606,791 Deposits payable 9,659,362 9,428,061 Unearned income from financial guarantee services 482,029 773,402 Accrual for financial guarantee services 588,740 880,725 Tax payable, net – 20,449 Other current liabilities 629,073 742,745 Deferred tax liability 333,617 303,567 Total Liabilities 28,053,542 32,755,740 Shareholders’ Equity Series A Preferred Stock (par value $0.001 per share, 1,000,000 shares authorized at December 31, 2013 and 2012, respectively; nil and 645 shares issued and outstanding at December 31, 2013 and 2012, respectively) $ – $ 1 Series B Preferred Stock (par value $0.001 per share, 5,000,000 shares authorized at December 31, 2013 and 2012, respectively; nil and 640 shares issued and outstanding at December 31, 2013 and 2012, respectively) – 1 Common stock (par value $0.001 per share, 100,000,000 shares authorized; 10,430,657 and 9,000,000 shares issued and outstanding at December 31, 2013 and 2012, respectively) 10,431 9,000 Subscription receivable (1,062 ) (11,062 ) Additional paid-in capital 52,704,107 44,247,397 Statutory reserve 5,442,150 4,232,164 Retained earnings 20,300,689 14,558,205 Accumulated other comprehensive income 6,493,591 4,213,373 Total Shareholders’ Equity 84,949,906 67,249,079 Total Liabilities and Shareholders’ Equity $ 113,003,448 $ 100,004,819 FinanceInvestment & Company InformationShareholders’ EquityJiangsu ProvinceChina Contact: Investors

Jimmy Caplan
Asia IR/PR
Rick Eisenberg
Asia IR/PR

Workplace Loans May Replace Payday Loans – The Consumer Eagle

Read More: Workplace Loans May Replace Payday Loans – The Consumer Eagle

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Positive fund flows reflect strength in the leveraged loan market


Why refinancing deals crowded the high yield bond market (Part 6 of 6)

(Continued from Part 5)

Strength continues

The leveraged loan market (BKLN) had an inflow of $327 million last week, maintaining a very strong and steady pace for several months now. While this is lower than the $527 million from the previous week and $358 million two weeks ago, it marks the 92nd straight week in a row of cash inflows. Of the total, roughly 16% of inflows were tied to the ETF segment.

The four-week trailing average dipped to $483 million, from $504 million last week and $510 million two weeks ago. Year-to-date inflows totaled $6.5 billion, compared to last inflows of $12 billion during the same period.

The S&P/LSTA U.S. Leveraged Loan 100, which tracks the 100 largest loans in the broader index, gained 0.31% for the month ending March 25, 2014. The index provided an annualized one-year return of 4.37%.

The major ETF that tracks the S&P/LSTA U.S. Leveraged Loan 100 index is the PowerShares Exchange-Traded Fund Trust II (BKLN). Many investors favor leveraged loan ETFs to negate the effect of rising interest rates. Leveraged loans normally pay a floating interest rate above LIBOR, which adjusts with changes in interest rates.

Another major leveraged loan ETF is the Pyxis/iBoxx Senior Loan (SNLN). The ETF comprises about 100 of the most liquid, tradable leveraged loans, as identified by Markit’s Loans Liquidity service.

These ETFs—with top holdings in Clear Channel Communications, Inc., (CCMO) and Dell International LLC (DELL)—have posted an outflows $43.5 million and $0.45 million, respectively, last week.


Returns from leveraged loan ETFs are better placed than high yield bond (HYG) ETFs in terms of interest rate volatility, as the underlying loans are usually of a floating-rate nature and are benchmarked to the London Interbank Offer Rate (or LIBOR). Plus, leveraged loans also have some surety in terms of their investment being backed by the issuing company’s assets. Consequently, the issuer company also doesn’t need to pay a premium as high as in the case of high yield bonds to sell these securities. So, loans have lower quoted yields than high yield bonds.

Leveraged loans also suffer from credit risk, much like high yield bonds (JNK). However, with an improving economy, the credit risk associated with leveraged loans or high yield bonds is reducing, bringing credit spreads down. As leveraged loans are secured by the company’s assets, and as they offer investors protection against interest rate hikes, investors may continue to favor leveraged loans over high yield bonds in the current environment.

To learn more about investing in fixed income securities, check out Market Realist’s Fixed Income ETFs page.

Browse this series on Market Realist:

Part 1 – Why was high yield bond activity little changed last week? Part 2 – Refinancing deals continue to top the high yield bond scoreboard Part 3 – Why high yield fund flows stayed positive 6 weeks in a row ETFsFinanceleveraged loan […]

Payday loan branded 'debt sentence' as 4 in 5 struggle to repay

Like Share… Email page Print page To email address: (required)Your name: (required)Your email address: (required)SendCancel Close Payday loan branded ‘debt sentence’ as 4 in 5 struggle to repay 31 March 2014Payday loan customers who are struggling to repay their loan are not having the interest rates frozen, aren’t warned about the cost of extending the loan and aren’t being told about free debt advice, despite promises from lenders to do so finds Citizens Advice.New figures out today reveal people struggled to repay their loan in four out of five cases reported to Citizens Advice since 3 October 2013.Evidence from Citizens Advice finds that, despite promises made 16 months ago by payday lenders to treat their customers fairly, those in acute financial difficulty are still bearing the brunt of the industry’s failings. Of the 807 cases where people struggled to repay: 86% did not have the interest or charges on their loan frozen; 4 in 5 were not treated with sympathy; a third were put under pressure to extend the loan; 84% were not told the risks of extending the loan; 9 in 10 said there weren’t any checks made when extending the loan; Two thirds (64%) were not told about the cost of extending the loan; 9 in 10 were not told about free debt advice.The data is from an analysis of feedback on 1,016 loans reported to the Citizens Advice payday loan tracker between 3 October 2013 – when the FCA announced its proposed rules for payday lenders – and 20 March 2014. The findings come just days before the FCA is due to take over responsibility for regulating the whole of the consumer credit market on 1 April. The new evidence also reveals customers are not being given the necessary information about Continuous Payment Authorities (CPAs) – the method many lenders use to collect repayments. In 359 cases where the borrower knew they were repaying the loan through a CPA, it was not explained how CPAs work in three in four loans, 92% were not told how to cancel and half didn’t get a three-day reminder that a payment would be taken, as promised by the lender. Citizens Advice Chief Executive Gillian Guy said:“A payday loan has become a debt sentence for many of our clients due to irresponsible practices by lenders. Consumers who are looking for a bit of money to tide them over need a fair and competitive market to engage with not one that seeks to exploit them. The stern warning and tough rules from the FCA need to be followed with strong enforcement action. Lenders found to breaking the rules and harming consumers should be immediately thrown out of the market. “Citizens Advice continues to deal with people on a daily basis who have been driven deep into debt because of payday lenders’ harmful behaviour. The FCA listened to the problems our clients have had with payday lenders and acted on our advice, including introducing rules to make sure proper checks are made to assess whether the borrower can afford to repay. It’s important the FCA doesn’t pull any punches with payday lenders and delivers on its commitment to ensure a fair market for all consumers.” Last month Citizens Advice reported seven payday loan adverts to the Advertising Standards Authority over concerns about irresponsible advertising. As part of the regulatory changes, the payday lending industry will be subject to the FCA’s powers to ban adverts including those that contain misleading headline claims, unfair or unrealistic impression of the product or a lack of prominence given to key risks. Citizens Advice has had feedback on 4,666 payday loans since it launched its tracker on 26 November 2012 to coincide with the new customer charter from the payday loan industry. This has formed part of its campaign to get tougher rules for the payday loan industry and for lenders to treat their customers fairly.Citizens Advice

Notes to editors

  1. This year the Citizens Advice service celebrates its 75th anniversary. We’ve planned a year of activity running from January to December 2014. Contact the press office to find out more.
  2. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  3. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  4. To find your local bureau in England and Wales, visit You can also get advice online at
  5. You can get consumer advice from the Citizens Advice consumer service on 08454 04 05 06 or 08454 04 05 05 for Welsh language speakers
  6. Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 6.6 million problems from April 2012 to March 2013. For full 2012/2013 service statistics see our quarterly publication Advice trends
  7. Citizens Advice service staff are supported by more than 22,000 trained volunteers, working at over 3,000 service outlets across England and Wales.


Payday Loan Reform Still a Possibility

New Mexico legislators have proposed a constitutional amendment that would limit total charges on all short-term loans to an annual percentage rate (APR) of 36 percent. Currently, the effective APR of these loans can exceed 100 percent or 200 percent; but a 36 percent cap could eliminate most of these products.

An alternative to the interest-rate ceiling may be to try to generate other options for short-term borrowers, such as employer loans. An employer may already know whether a worker is a substantial credit risk, according to Dick Minzner, a former New Mexico Taxation and Revenue secretary. The state’s lending and employment laws would have to be altered to permit employers to make these loans and to charge fees or interest.

The availability of employer loans also would require changes in public perception, says Minzner, who recommends against the use of APR to evaluate these loans. A $500 loan for two weeks, at a fee or interest of $15 amounts to an APR of approximately 80 percent. While such a percentage rate might be criticized, Minzner says this would be a more favorable arrangement than the other types of short-term loans available in the existing market.

A market-based solution may be another alternative to existing payday loans. Advocacy groups and reform supporters say the short-term loan business could still thrive with much lower interest rates. If so, Minzner says, then a lender that charges lower rates should be able to get a substantial share of the market. He suggests that advocates who believe it is possible and important to reduce the cost of short-term loans find and fund someone who can operate a less expensive lending business. He also advises that an interim legislative committee, employers, and reform advocates address these issues before the next legislative session.


Payday Loans | How To End The Payday Loan Nightmare [Must See]

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Click Here: Millions of people turn to payday loans to get out of a tight financial spots or unforeseen emergencies…. […]

Auto lenders shifting their focus to refinancing

Kiatnakin Bank’s auto-loan refinancing product – KK Car Cash – will be strongly promoted to retail customers through its branches and via its new strategic partner, B-Quik, a leading auto-maintenance operator, said Aphinant Klewpatinond, president and chairman of commercial banking.

The bank recently signed a three-year exclusive agreement with B-Quik in the expectation that the large number of B-Quik branches will help create brand awareness of KK Car Cash among vehicle owners who need cash.

The bank began offering auto-loan refinancing this year.

B-Quik has 102 branches in its network, while Kiatnakin Bank has 87 branches around the country.

As an auto-maintenance operator, B-Quik can assure the quality of vehicles subject to refinancing by the bank, he said, adding that Kiatnakin Bank will promote additional auto-loan products via B-Quik in the next phase of their partnership.

Meanwhile, Thanachart Bank’s senior director for hire purchase, Teerachart Jirajaratporn, said the bank had been penetrating the auto-loan refinancing market for the past three years, as this type of product was low risk and generated a high yield compare with used- and new-car lending.

The bank offers auto-loan refinance to customers who used to be new-car loan customers, as it knows their backgrounds well.

Vehicle-loan refinancing totals more than Bt10 billion of the bank’s auto-loan portfolio of Bt400 billion, he said.

Thanachart Bank has also soft-launched a new auto-loan refinance product called Cash Your Car Top-Up to tap customers who have nearly repaid their original vehicle loan from the bank.

Meanwhile, the bank still uses its branches as the main channel to promote auto lending and refinancing. However, it is also conducting a feasibility study of other channels in order to strengthen its products and distribution in the future, he added.

T-rathorn Thuwanontha, director and secretary-general of the Thai Hire-Purchase Association, said auto-loan refinancing was the right product for lenders to focus on amid the economic downturn and lower new-car sales.

Hire-purchase lenders are more active in this category, with several having strongly promoted car-loan refinance since the beginning of the year. This is because many people need additional cash amid the economic downturn in order to pay for seasonal purchases, such as those that need to be made ahead of the new school semester, he said.

Of the total Thai auto-lending market worth Bt700 billion, refinancing accounts for Bt70 billion-Bt100 billion, with Krungsri Auto being the market leader, followed by Thanachart Bank.

The main advantage of auto-loan refinance for consumers is the interest rate, which is better than that charged for personal loans. Car-loan refinancing attracts interest of 10 per cent per year, against more than 20 per cent for an unsecured loan, he said.

For lenders, refinancing is low risk because they know the instalment-payment background of customers, besides which it provides a high yield, he added.

T-rathorn is also an executive vice president at KTB Leasing, which this year entered the vehicle-loan refinancing segment by targeting 1,500 units per month.

Krung Thai Bank is the main channel for selling the company’s refinancing offerings.


Rising mix and match mortgages


Increasingly savvy home-owners splitting mortgages into fixed and floating loans as rates start to rise, banks say.

Until recently, the most popular rate for those wanting to fix was the one-year rate. Photo / Greg Bowker

More mortgage holders are opting to split their home loans into fixed and floating rate portions after the recent cash rate increase, say banks.

The Reserve Bank increased the official cash rate from 2.5 per cent to 2.75 per cent this month after years of holding it at a record low, prompting banks to increase their floating and short-term home loan rates.

Westpac head of retail banking Ian Blair said there had been a trend towards people fixing their mortgage rates in the last 12 months and the activity had increased in the last month or so.

“People began thinking about it more when they came back from their post-Christmas holiday.”

Until recently, the most popular rate for those wanting to fix was the one-year rate but that had switched in the last week and data showed one, two and three-year fixed rates were now equally popular at the bank.

“A lot was going into the one-year fixed rate but now we are seeing customers spreading it.”

Blair said a trend that had emerged since the last time rates rose was a decision to mix and match the floating and fixed rates.

He believed that was being driven by better products and people having a better degree of financial literacy than what they might have in the past.

It’s a change that has also been noted at rival bank ASB. Shaun Drylie, general manager of products and strategy at ASB said people were opting for more partial fixed and floating splits.

“People are starting to box the field rather than putting it all on the nose.”

Banks have seen their loan books heavily weighted towards floating mortgages in recent years, bucking the past trend of most lenders being on fixed loans.

In the past, around 70 to 80 per cent of bank mortgages were on fixed rates.

Blair said he had little doubt the market would return to where it was in the past with high levels of fixed-rate mortgages.

“We are not there yet … but I think we will get back to levels we were at in the late 2000s.”

That posed problems for the Reserve Bank as changes to the official cash rate typically took around 18 months to have an impact.

Blair said it was not for him to say if the Reserve Bank’s policy would be effective, but fixed rates had already started moving up.

“Six months ago, people were able to get a one-year fixed rate in the late fours.

“Even if they come out of that fixed rate into another fixed rate there will be a jump.”

Blair said very few people were choosing to fix on long-term rates a year ago.

Mark Brown, a fixed-interest fund manager at Harbour Asset Management, believes it will take at least six months before the full impact of the cash rate increase will be felt by mortgage holders.

Brown said that timeframe was based on a judgment of how people were feeling going into the increase.

“The economy is in such a good shape, people are confident about their jobs,” he said. “I’m not sure it will change things a whole lot [straight away].”

Cash used to lure custom

Banks have ditched free electronic devices in favour of cash in a bid to attract new customers.

Ian Blair, head of retail banking at Westpac, said cashback offers had become popular across the banks since competition heated up after the ANZ/National bank merger.

The merger in 2012 sparked an advertising drive from ANZ’s competitors, with offers of free TVs, mobile phones and tablets.

But cash appears to now be king with three of the major banks offering deals. Blair said ultimately people wanted to decide for themselves what the money was spent on.

Blair said mortgage holders had also got more savvy demanding better rates, features and flexibility.

“In years gone by home loans were quite homogenous – people didn’t question what the rate was. Now there is a lot more discussion around the rate, features and flexibility.”

NZ Herald


Number of properties being bought for cash is on the increase


Mortgages contributed less than 40% of the total value of the 960,000 property transactions in 2013, Imla said Photograph: Simon Warren/CORBIS

Cash buyers were behind four in 10 property purchases in 2013, according to research that underlines the limited powers of the Bank of England to prevent a housing bubble by raising borrowing rates or restricting conditions for mortgages.

Analysis by the Intermediary Mortgage Lenders Association (Imla) found that the proportion of home purchases funded by mortgages dropped to 62% last year, the lowest level since 2005 when comparable data was first available.

The figures come days after the bank’s governor, Mark Carney, said it would be impossible to control price inflation in the London market because of the high proportion of cash buyers. Prices are also being pushed up by a limited supply of properties for sale, and new figures from the government show that the number of homes completed last year in England dropped by 5% to 109,370 – fewer than half the number experts estimate is needed to cater for demand.

In 2006, as the market neared its peak, the proportion of housing transactions funded by mortgages hit 76% Imla said, but tighter lending criteria after the credit crunch forced out some would-be buyers and the figure fell to 65% in 2008.

That figure recovered to 67% in 2010, but has fallen again as homeowners have cashed in on rising prices to buy with their equity and wealthy investors have come into the London market.

According to the Council of Mortgage Lenders mortgage lending has been rising: gross lending for January was down by 8% on December’s figure, but at £15.5bn was up by a third on the same month last year.

But mortgages contributed less than 40% of the total value of the 960,000 property transactions in 2013, Imla said, with just £398 in every £1,000 spent on homes being loaned by banks and building societies.

Peter Williams, executive director for IMLA, said: “The shift towards cash and equity for property purchases may be less of a concern if you already have your foot in the door. But plenty more people are still shut out, even when their income and financial track record means they can sensibly manage a loan.

“We are a long way from a normal mortgage market and must stay focused on improving access for responsible buyers who cannot hope to conjure up a vast sum of cash or equity.”


Banks stockpile cash for lending

Posted: Saturday, March 29, 2014, 1:08 AM

For all the warnings from the Federal Reserve over excessive risk-taking as loan growth soars to levels last seen just before the crisis, bankers still have 10 trillion reasons to lend.

That’s the dollar amount that banks hold in deposits in the U.S., which exceeded the value of all loans by a record $2.5 trillion last month. Banks are amassing more cash even as lending to U.S. companies this quarter is poised to increase by the most since 2007, according to data compiled by the Fed.

The lending surge reflects confidence among the nation’s banks to extend credit as the Fed scales back its monetary support of the U.S. economy, while the cash cushion may temper the concerns of regulators who in recent months have warned that excesses may be emerging in riskier parts of the loan markets. Seven years ago, when banks were lending at a faster pace, the amount that was lent outstripped cash deposits.

“Banks are not exhibiting anywhere close to the kind of excess we saw leading up to the crisis despite the growth in loans,” John Lonski, the chief economist at Moody’s Capital Markets Research Group, said in a telephone interview from New York. “They have a lot of lending capacity and they believe business conditions will remain good enough that borrowers will be able to meet their obligations.”

Cash deposited at banks increased to the record level through the week ending March 12, compared with loan assets of $7.5 trillion, the Fed data showed. This is a reversal from October 2008 when loans exceeded deposits by $205 billion.

The $68 billion jump in commercial and industrial loans made by banks to U.S. companies brings corporate borrowings to $1.67 trillion.

Known in the industry as C&I loans, they are one of the major components of the “loans and leases” that banks report.