Latest news with #NBFI
Yahoo
6 days ago
- Business
- Yahoo
IMF warns of rising risks in Canada's financial system despite bank resilience
Canada's financial system remains broadly resilient despite mounting economic uncertainty, the International Monetary Fund (IMF) said in its latest assessment — but warned that rising household debt, mortgage renewals and gaps in cyber and pension oversight could expose vulnerabilities in the years ahead. In its 2025 Financial System Stability Assessment (FSSA), the IMF said Canada's big banks, insurers and pension funds are well-capitalized and capable of withstanding major economic shocks. However, the report flagged growing risks tied to a wave of upcoming mortgage renewals, high household debt levels and a lack of coordination among financial regulators — including the Office of the Superintendent of Financial Institutions (OSFI), the Bank of Canada and provincial authorities — in responding to systemic threats such as cyberattacks, housing market shocks and climate-related disruptions. For the banking and financial sector, the report said 'total assets of financial institutions reached 756 per cent of GDP in 2024, increasing by 43.3 per cent since 2019.' Non-bank financial institutions (NBFIs) have become a dominant force in the sector, now accounting for 65 per cent of total assets. Since the last IMF review in 2019, the NBFI sector has expanded significantly, with investment fund assets growing from $2.6 trillion in 2020 to $3 trillion in 2023 — roughly 110 per cent of GDP. Canada's insurance market ranked ninth globally in terms of written premiums, according to the report. Pension funds continue to play an outsized role, holding $2.2 trillion in assets in 2023, or about 75 per cent of GDP — one of the largest pension sectors in the G7. The IMF notes that while NBFIs remained resilient, data gaps and inconsistent oversight remain concerns, particularly for large pension plans. The sector has grown in size and importance since the 2019 assessment but regulatory coordination has not kept pace. The report said the banking sector's Common Equity Tier 1 (CET1) ratio is 13 per cent. The CET1 ratio measures a bank's core capital relative to its risk-weighted assets, indicating its ability to absorb losses. A higher ratio signals strong financial health and compliance with global regulatory standards. A 13 per cent CET1 ratio indicates that Canadian banks are well-capitalized — significantly above the international regulatory minimum of 4.5 per cent, and even above the commonly recommended levels of around 10–11 per cent. This gives them a strong buffer to absorb losses in times of economic stress. The report raised concerns about the real estate market in Canada. 'As of December 2024, approximately 60 per cent of mortgages will renew by 2026 at likely higher rates, which could increase payment burdens and delinquencies if economic conditions deteriorate,' it said. Canada has the highest household debt-to-GDP ratio among G7 countries, a key vulnerability flagged by the IMF. While it reflects strong credit access and homeownership, it also leaves households — and the broader economy — more exposed to rising interest rates, job losses or housing market downturns. On the positive side, the report noted Canada's mortgage delinquency rate stood at just 0.2 per cent in December 2024 — well below historical norms — suggesting most homeowners still managed to keep up with their payments despite rising rates in the last cycle. Under the IMF's 2025 adverse scenario, mortgage default rates are projected to rise to 0.9 per cent for uninsured loans and 1.4 per cent for insured loans, while corporate defaults could climb from 0.5 per cent to 1.3 per cent by 2027 — posing sharper risks than anticipated in 2019. The report also warned that broader geoeconomic tensions — global conflict, shifting trade policies, reduced labour mobility and weak financial systems — posed a high risk to Canada's economic outlook. Other emerging threats include cyber-attacks, climate change and a potential housing market correction. The IMF flags cyber risks as high, noting they could disrupt payment systems and undermine financial institutions' ability to function. Cuts to Canada's growth 'stand out' in latest IMF economic outlook Canada set to be fastest growing economy in G7 in 2025, IMF forecasts Climate-related disasters, such as wildfires and floods, carry medium-level risk, potentially triggering credit and liquidity stress. A sharp decline in home prices could drive up loan-to-value ratios, raise unemployment and curb household spending and investor confidence. Inicia sesión para acceder a tu portafolio
Mint
19-06-2025
- 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.
India Gazette
19-06-2025
- 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)
Reuters
12-06-2025
- Business
- Reuters
Watch out for dollar FX fall more than 'de-dollarization'
LONDON, June 12 (Reuters) - Evidence of "de-dollarization" around the world remains scant, but many major investors fear a gradual drawback from U.S. assets is now inevitable and the dollar's exchange rate may have to fall further to clear the market. The debate about the U.S. dollar's dominant role in global trade, reserves and investment portfolios has smoldered for decades, but it has reached a crescendo during the turbulent first few months of President Donald Trump's second term in the White House. European Central Bank boss Christine Lagarde, opens new tab recently put a spotlight on this shift in market thinking, noting "highly unusual cross-asset correlations" involving simultaneous drops in the dollar, Treasuries and U.S. stocks after Trump's import tariffs announcement in April. But despite all of the de-dollarization noise, there are still no clear indications of a mass withdrawal from dollar assets at large. In fact, some investors dismiss these fears altogether given the pattern of the past 10 years. Bank of America strategist Ralph Axel argues that despite all of the speculation, the world has actually been "rapidly dollarizing" over the past decade - at least in the sense that dollar liabilities have expanded enormously. In a research report on Thursday, Axel points in particular to the growth of the so-called shadow banking system, otherwise known as "Non-Bank Financial Intermediation", or NBFI, and refers to the universe of investment funds, private credit firms and even crypto funds that exist outside the regulated banking system. All dollar liabilities are effectively "money" in the sense that they can be sold for dollar cash and are thus ultimately claims on the Federal Reserve. Some of these liabilities are direct claims, such as U.S. Treasuries, but there are a blizzard of indirect claims through uninsured deposits, mortgage and corporate debt and investment fund shares. Dollar liabilities have clearly ballooned in the past decade. The U.S. federal debt has increased four-fold in less than 10 years to some $36 trillion, while bank deposits have more than doubled to $18 trillion since 2008. And, as Axel points out, the total size of "shadow banks" has also more than doubled since 2009 to roughly $63 trillion, according to S&P Global data. While much of this expansion simply reflects asset price appreciation, Axel notes that "the NBFI system can only grow because of demand for its liabilities." The point of all this number-crunching is to undermine the simplistic de-dollarization narrative. If de-dollarization were truly accelerating then fewer, not more, U.S. liabilities could be created, whether from the government, traditional lenders or shadow banks. And the trend has clearly been the other way. "A big selling wave can move prices and exchange rates temporarily but does not de-dollarize," he wrote. "As a result, we think the de-dollarization theme is less threatening, especially given what appears to be a stronger trend of global dollarization over time." In other words, the exchange rate of the dollar can fall even if dollar assets are not contracting. A weakening exchange rate simply signals that temporary demand for dollar assets is declining and a lower dollar sticker price is needed to clear the market. "We would caution investors to not miss the dollar story for the dollar trees," the Bank of America strategist concluded, in reference to the confusion between exchange rates and the ubiquity of dollars and dollar assets. Of course, the trends of the last 10 to 15 years may have crested, and that's precisely this year's concern. Questions about the dollar exchange exposure were also raised by Deutsche Bank's currency research team this week in a deep dive into the hedging behavior of the world's big pension and insurance funds with the heaviest overseas assets holdings. They showed that Nordic, Dutch and Australian institutional funds had more than 50% of their investment portfolios invested abroad, with Japan's and Switzerland's foreign holdings also high at above 30%. They concluded that most of these investments are in the U.S. and much of the currency risk is not being hedged, meaning exposure to the U.S. dollar is likely historically high. But as these funds' hedging activity is now increasing, they reckon, it should pressure the dollar exchange rate lower. All of which raises an important, albeit circular, question. To what extent was the performance of U.S. assets exaggerated in recent years by investors assumption of an ever-rising dollar and a hedge against global shocks? And was the dollar just rising because of that outsize overseas demand for U.S. stocks and bonds? And, on the flip side, to what extent could a weakening dollar now cause demand for those assets to fall? What market pricing near mid-year suggests is that even if de-dollarization fears are overblown, the dollar's exchange rate may be a necessary safety valve. The opinions expressed here are those of the author, a columnist for Reuters.
Zawya
15-05-2025
- Business
- Zawya
Egypt: Beltone Holding reports $55mln in revenues in net profit for Q1 2025
Egypt - Beltone Holding has announced strong financial results for the first quarter (Q1) of 2025, with consolidated operating revenues reaching EGP 2.8bn—a 2.2x increase year-on-year. Net profit surged to EGP 703m, marking a 1.4x year-on-year growth. The Group's total outstanding lending portfolio also saw significant growth, more than doubling to EGP 30.2bn. Commenting on the results, Group CEO and Managing Director Dalia Khorshid said: 'Our Q1 performance underscores the strength of our data-driven growth strategy and resilient business model. These results set a solid foundation for what we aim to achieve in 2025 and beyond. With a second historic capital increase recently concluded, we're entering the next phase with renewed confidence, supported by the trust of our shareholders and the market.' Beltone's non-banking financial institutions (NBFI) platform delivered robust performance, with operating revenue rising to EGP 2.3bn—more than double the div from Q1 2024. This growth was driven by new product launches and increased market share, supported by strong results across leasing, factoring, mortgages, consumer and microfinance, venture capital, and the newly introduced SME financing. Meanwhile, the investment banking platform recorded EGP 531m in operating revenue, also reflecting a 2.2x year-on-year increase. The investment banking division posted a standout performance with revenues jumping 6.7x year-on-year, highlighting the growing momentum across its expanded offerings. Securities brokerage and asset management together contributed 50% of the platform's total revenue.
