News2 mins ago
loan losses
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i will like to know the impact an increase in loan losses can have on a banks income, expenses and viability.
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Factor30 is essentially spot on.
Basically if loan losses or "bed debt" as its referred to increases...then the bank are exposed to losses, and therefore may have to tighten their belts as this will eventually have a knock on effect on their profits. Therefore their share price may be effected.
As a consumer (customer) then you may see an increase in interest rates on borrowing from banks, or what seems to be hapenning at the moment, is they are closing the books on higher risk lending (stop lending to people who pose a high risk to the bank by not repaying the loan/mortgage/credit cards etc) until things get better..!!
Hope this helps a little.!!!
Basically if loan losses or "bed debt" as its referred to increases...then the bank are exposed to losses, and therefore may have to tighten their belts as this will eventually have a knock on effect on their profits. Therefore their share price may be effected.
As a consumer (customer) then you may see an increase in interest rates on borrowing from banks, or what seems to be hapenning at the moment, is they are closing the books on higher risk lending (stop lending to people who pose a high risk to the bank by not repaying the loan/mortgage/credit cards etc) until things get better..!!
Hope this helps a little.!!!
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