Latest news with #loanGrowth
Reuters
2 days ago
- Business
- Reuters
Bank of Ireland raises income guidance to 2027 on strong loan growth
DUBLIN, July 29 (Reuters) - Bank of Ireland (BIRG.I), opens new tab upgraded its full-year net interest income guidance to 2027 on Tuesday after reporting strong loan book growth in the first half when lower interest rates reduced its pre-tax profit by one-third. Ireland's biggest lender also said its estimates in February for deposit and loan book growth of 3% and 4% respectively in both 2026 and 2027 were unaffected by the macroeconomic uncertainty associated with U.S. tariffs. On Sunday, a deal between the U.S. and the EU, which includes Ireland, imposed a 15% tariff on most European Union goods. First half pre-tax profits fell to 721 million euros ($832.32 million) from 1.1 billion euros in 2024 following a run of European Central Bank rate cuts. Bank of Ireland shares were 1.7% lower in early trading. The bank's Irish loans and deposits grew by 5% year-on-year in the first half, the former driven by mortgage lending where Bank of Ireland has a market leading 40% share. That prompted the upgrade of net interest income for 2025 to 3.3 billion euros from the prior guidance of above 3.25 billion, with the forecasts for 2026 and 2027 also nudged up to above 3.3 billion and greater than 3.5 billion respectively. The upgraded net interest income forecasts point to upside to 2026 and 2027 management and consensus expectations, analysts at Davy Stockbrokers wrote in a note. Analysts expect pre-tax profits to fall by 18% for 2025 as a whole, based on an average of 12 polled by LSEG SmartEstimate. Bank of Ireland finance chief Mark Spain told Reuters that the trade deal on Sunday would not alter the bank's July 17 upgrade to its forecasts for Irish economic growth and that the removal of uncertainty may offer some upside. He added that its loan book showed there were no perceptible challenges emerging from the tariffs and that the caution larger business customers had shown at the height of trade tensions in April was beginning to dissipate. ($1 = 0.8663 euros)
Zawya
02-06-2025
- Business
- Zawya
Why Uganda's private sector is squeezed out of credit market?
Uganda's private sector was pushed to the periphery of the credit market in the first quarter of 2025, even as the government tapped heavily into the local lending basket for funds. Data also shows that local telecommunications firms absorbed significant new loan facilities during the same period. Growth in private sector credit slightly declined to 7.9 percent between January and March 2025, compared to 8 percent recorded between October and December 2024, according to the latest Bank of Uganda (BoU) data. The growth rate for Ugandan shilling-denominated loans fell from 10.3 percent in the last quarter of 2024 to 10 percent during the first three months of 2025. In contrast, growth momentum in foreign exchange-denominated loans slightly increased, from 2 percent between October and December 2024 to 2.3 percent in the first quarter of 2025. The total value of commercial bank loans disbursed to the private sector rose by 4 percent to Ush21.5 trillion ($5.9 billion) between December 2023 and December 2024, while the industry loan default ratio fell to 3.9 percent over the same period. The increased government borrowing is attributed to slow growth in tax revenues and a surge in government expenditure driven by supplementary budget requests. Lenders also prefer lending to the government, as it offers higher returns, reducing their appetite for private sector lending as they seek to avoid risky loans.'Apart from domestic government borrowing raising rates for borrowers, its refinancing arrangements - through rollovers and not repaying principal amounts - reduce liquidity in financial markets, whose fund allocation is driven by market incentives,' said Dr Fred Muhumuza, a local economist.'It also diverts private investments from the real economy, which creates jobs and growth, to financial instruments that only generate financial wealth.'The real cost of borrowing incurred by private businesses seeking alternative sources of credit remains unclear. Average yields on the 91-day Treasury bill rose from 9.9 percent in the quarter ending April 2024 to 10.9 percent in the quarter ending April 2025, according to BoU data. Yields on the 364-day Treasury bill increased from 14.6 percent to 16.7 percent over the same period. The yield on the two-year Treasury bond rose from 13.3 percent to 15.5 percent, while that on the five-year bond increased from 14.8 percent to 16.2 percent. Similarly, the yield on the 10-year bond rose from 15.8 percent to 16.7 percent, and the 15-year bond yield climbed from 16.2 percent to 17.1 percent. Local telecommunications companies, however, dominated private sector borrowing during the same period. Their infrastructure investment needs and quarterly dividend payments were cited as key drivers of significant borrowing, though details of specific transactions remained unavailable at press time.'Most of the lending directed to telecommunications companies is meant for new infrastructure investments and quarterly dividend payments.'Their loans are priced on the Structured Overnight Financing Rate (SOFR), tied to a three-month average plus four percent, equivalent to an annual interest rate of 8 percent on US dollar loans.'Some loans disbursed to the telecommunications sector have a five-year tenure. These companies play a big role in the economy and provide a reasonable gauge for monitoring the country's economic health. We are less worried about credit risks in the telecommunications sector at this time,' observed a financial analyst at Absa Bank Uganda, who requested anonymity due to confidentiality obligations. Michael de Kock, an economist at Oxford Economics Africa based in South Africa, said that while precise data on borrowing costs from alternative sources was limited, tighter credit conditions suggest they are on the rise.'Despite tighter credit, April's PMI hit a five-month high, suggesting businesses are adapting to higher borrowing costs. The telecommunications sector's heavy bank borrowing reflects strategic confidence rather than financial distress.'The March 2025 network sharing agreement signed between MTN and Airtel further illustrates strategic capital optimisation while expanding coverage,' he explained. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
