Latest news with #consumerfinance
Zawya
4 days ago
- Business
- Zawya
$5.70bln in total financing provided by regulated entities in Q1 2025: Egypt's FRA
Egypt - The Financial Regulatory Authority (FRA) announced that entities under its supervision provided a total of EGP 283.6bn in financing during the first quarter (Q1) of 2025. This includes all regulated non-banking financial activities, such as capital markets, insurance, leasing, and consumer finance. In its quarterly report, the FRA revealed that equity issuances during Q1 totaled EGP 2bn, while issuances of securities other than shares reached EGP 3bn. Leasing contracts were valued at EGP 1bn during the same period. Financing extended to micro, small, and medium enterprises (MSMEs) reached EGP 24.4bn, underscoring the sector's importance in supporting economic growth and job creation. Consumer finance amounted to EGP 17.5bn, and factoring activity—financing through the purchase of accounts receivable—stood at EGP 29.8bn. Mortgage finance also remained strong, recording EGP 11.2bn in value. The FRA noted that the value of disclosures on movable assets registered in Egypt's collateral registry reached EGP 3trn in Q1, reflecting the growing use of movable assets as loan collateral. Meanwhile, the outstanding balances of MSME financing totaled EGP 6bn. In the insurance sector, collected premiums reached EGP 30.3bn in the first three months of the year. Of this, property and liability insurance contributed EGP 17.5bn, while life and fund formation insurance accounted for EGP 12.8bn. Paid compensation by insurers during the same period totaled EGP 13.7bn—EGP 6.6bn for property and liability insurance, and EGP 7.1bn for life and fund formation policies. Private insurance fund investments reached EGP 6.5bn during Q1, indicating solid growth in long-term savings and retirement-related instruments. The FRA clarified that property and liability insurance includes coverage against risks such as fire, theft, and damage to physical assets, including homes, vehicles, and commercial goods. Life and fund formation insurance comprises life coverage, personal accident insurance, and savings-based policies that help individuals plan for future financial needs. The authority's report reflects the continued development of Egypt's non-banking financial services sector, a key pillar in the country's economic diversification and financial inclusion strategies. © 2024 Daily News Egypt. Provided by SyndiGate Media Inc. (
Telegraph
29-05-2025
- Business
- Telegraph
How Klarna created a nation of shopaholics
In just a few clicks, that big-ticket purchase you've been mulling over for weeks is reduced to a trifling monthly fee – or postponed until after the next payday. Buy now, pay later deals (BNPL) have long been offered by retailers to help spread costs of big purchases. But Klarna, a Swedish lender specialised in the form of consumer finance, is making them ubiquitous. Emma Reynolds, Economic Secretary to the Treasury, this month said companies like Klarna were operating in a 'wild west' devoid of adequate regulation, as the Government confirmed long-awaited new rules for the sector akin to those followed by banks and other financial institutions. Klarna is increasingly offering the BNPL payment option for more than just one-off big purchases. Everything from haircuts to takeaways can now be snapped up by its users on zero-interest deals merely by filling in a few extra details at online checkouts. It is a formula that won the company an extra million British customers last year, with 11 million now using the service. But there is growing disquiet over whether companies offering BNPL are fuelling imprudent consumer spending. Klarna first courted controversy for its marketing campaign during the depths of Britain's Covid-19 lockdowns. Posts on Instagram by influencers promoting the product at the time called it a 'total mood booster' that enabled them to 'splurge' on their shopping, earning Klarna admonishment from the advertising watchdog in 2020 for having 'irresponsibly encouraged' the use of credit. There are good reasons why consumers have been flocking to BNPL companies like Klarna in recent years. The interest-free deals beat the easily high levels of interest charged on most credit cards. Klarna estimates it has saved UK consumers £470m in credit card interest payments since it began operating in 2014. Data published on its website from 2023 also claims just 5pc of its users made late payments, while the majority fully repaid earlier than needed. BNPL companies typically offer options to pay the full amount on a product right away, split the payment into three equal interest-free payments, or delay the payment for 30 days without paying any interest. Similar offers have also been adopted by payment platform PayPal. Call for affordability checks Klarna, as well as one of its largest competitors, Clearpay, have long been able to sell credit to consumers without affordability checks. Unlike banks, consumers cannot make complaints about the companies to the Financial Ombudsman Service (FOS), which can order firms to pay out compensation in cases where they are found to have acted unfairly. The absence of stringent regulation of BNPL has long sparked calls for tougher measures. New rules were finally confirmed by Labour this month, and will come into effect by the middle of next year. The Financial Conduct Authority will require BNPL operators to conduct affordability checks on their customers, who will be able to bring complaints to the FOS for the first time. Stella Creasy, the Labour MP who raised the complaint over Klarna's Instagram adverts in 2020 with the Advertising Standards Authority, described BNPL companies as 'legal loan sharks'. The MP for Walthamstow singled out the late payment fee charged by the company, which is £5 for orders worth £20 or more, according to Klarna's terms and conditions. Late repayment fees are capped at £10 per order. She has previously made the same criticism of BNPL operators in the House of Commons. Ms Creasy said: 'Given the rapid growth of BNPL in the past few years, it is vital we regulate these legal loan sharks as quickly as possible to try to stem the debts they have pushed so many into.' She also warned of potential loopholes in new rules, which are yet to be finalised in law. 'I urge the FCA to be vigilant and not to rule out acting if these providers try to avoid accountability under these new rules by portraying themselves as working for retailers who aren't covered by these requirements rather than lending money to consumers [directly].' The new regulations are not expected to cover instalment financing deals offered by retailers themselves, presenting potential limitations of their effectiveness. Ms Creasy added: 'But frankly, given the scale of the problem, the sooner these come into force the better.' 'Loans to fund day-to-day spending' Most people using BNPL primarily purchase physical goods, such as technology, clothing and wellness products – according to payments platform Stripe. But there is evidence to suggest that an increasing number of people who use BNPL firms, not only Klarna, are buying day-to-day essentials. It has led to concerns that, instead of using the service for one-off large expenses that are easier to pay over time, consumers are turning to BNPL as a way to fund regular shopping. Klarna has significantly expanded the range of retailers where it is available, with M&S and John Lewis recently partnering with the company. Users can now download a 'one-time card' worth a fixed amount that sits within digital wallets like Apple Pay to be used in person at shops. A survey by Money Wellness, a debt advice company, found a 68pc increase in the number of people seeking help to repay BNPL debt in the past year. The average balance of those seeking debt support rose from £675 to £941 during that time. Sebrina McCullough, of Money Wellness, said: 'We've seen a significant rise in people struggling with 'buy now, pay later' debt, often because they've used it to plug gaps in everyday budgets. For many, it's become a way to spread the cost of essentials, like food shopping, rather than to cover large expenses.' Tom MacInnes, from Citizens Advice, has also noticed this trend. He said: 'We're helping more people than ever before who are struggling to repay unaffordable BNPL credit, and one thing is clear – BNPL is not a choice of convenience. For many, it's become a costly way to pay for basics, with little protection if things go wrong.' Klarna has become so widespread that it is available on takeaway apps including Deliveroo and Uber Eats. There are even some hair salons on Klarna's website that are listed as accepting the form of payment, for which users must pass a credit check before being approved. Most BNPL companies, including Klarna, limit the amount of loans a customer can take out based on their credit rating, allowing a customer with a good repayment record to stack up debt over time. Limits on the individual value of transactions and restrictions are imposed on accounts if they miss payments. Alice Tapper, a personal finance campaigner and author, said the spread of BNPL companies such as Klarna to pay for food was not the best use for the form of payment, but said it helped shoppers who were 'locked out' of obtaining credit cards. 'Is it a net positive? I think it depends on its use. There is a role for it in the market when you consider the cost of credit can be extremely high, and many people find themselves locked out of the financial system. An interest-free option is a good thing. 'It's now available on Deliveroo. Is that a good thing? Probably not; it's hard to argue it's an ethical use.' Ms Tapper added that the target users of BNPL should be 'people who have a one-off large expense, such as costs associated with moving house', for whom 'it [doesn't] make sense to put such purchases on a credit card with high interest that might spike'. 'Not as bad as payday lending' Martyn James, a consumer expert, came to the defence of BNPL companies, including Klarna. He said the sector had 'become a bit demonised over the years, which is a little unfair, as it's not the same as payday lending – which traps people in an endless cycle of debt'. He added: 'You'll be hard pressed to find an online shop that does not have a BNPL option, and the reason it is so popular is that it encourages people to make purchases they don't have the money to make.' However, Mr James said this was concerning at a time when household savings are increasingly low in Britain: 'A lot of people swear by [BNPL] and say paying in instalments makes it easier. 'One in 10 British adults has no cash savings, according to FCA research, making this form of borrowing risky for some. 'But there are loads of people who have no savings whatsoever and live pay cheque to pay cheque. What happens if you get hit with an unexpected bill or are laid off and you can't make that payment?' Klarna refers its customers to debt collectors if payments are not made by the last reminder due date. 'They're not hitting people with large amounts of debt charges, but they are handing people over to debt collection agencies which are aggressive,' he added. New rules to lower risks New rules will target BNPL lenders where they are acting as a third party between retailers and consumers, while instalment plans offered by shops are expected to remain exempt from stricter requirements. Firms offering pay-later financing will be required to conduct affordability checks that determine whether a consumer can afford to pay for a product over the loan period. This usually includes asking for details such as someone's income and regular expenditure each month. It is hoped that new regulations of BNPL will cut the risk of consumers using it for 'frivolous spending' and limit the deals to high-value items. Ben Perks, managing director of Orchard Financial Advisers, welcomed the new rules and said: 'Many people succumb to the ease and appeal of BNPL, but it often turns into a thorn in their side.' He added: 'The lack of responsible lending often sees borrowers over-exposed and stuck with unaffordable payments. With proper checks and balances, there is a place for buy now, pay later, especially on high-value essential items. But it shouldn't be a means to fund frivolous spending.' A Klarna spokesman said: 'With credit card interest rates soaring to record highs of 35pc, more people are turning to interest-free BNPL providers like Klarna. 'We believe UK consumers deserve a fairer alternative – wherever they can pay with a credit card, they should also have the option to pay with interest-free BNPL, helping them avoid the trap of high-interest credit card debt.'
Yahoo
24-05-2025
- Business
- Yahoo
UBS Upgrades FinVolution (FINV) Stock, Lifts PT
On May 23, UBS upped FinVolution Group (NYSE:FINV)'s stock to Buy from Neutral, increasing the price target from $11.80 to $12.10. As per the firm's analyst, the company's Q1 2025 results were robust, thanks to the margin expansion and asset quality. The company was able to beat earnings estimates slightly, despite seasonally soft loan volume. An individual using a laptop to access the fintech platform to manage their finances. The growth momentum in operating profit was stronger, while the margin expansion was supported by a decline in funding cost, a slightly lengthened tenor, and improvement in asset quality, added UBS. Overall, the firm's upgrade stems from the better risk-reward profile. FinVolution Group (NYSE:FINV), which operates in the online consumer finance industry, saw total transaction volume of RMB52.1 billion, while outstanding loan balance increased to RMB74.1 billion, exhibiting YoY increases of 7.9% and 13.5%, respectively. The performance exhibited continued robust execution of the company's Local Excellence, Global Outlook strategy. Moving forward, FinVolution Group (NYSE:FINV) opines that its diversified and resilient business remains well-placed to navigate the current global macro uncertainties. Its total liquidity position, comprising cash and cash equivalents and short-term investments, was healthy at RMB8.5 billion. This exhibits a strong balance sheet, which aids ongoing operations and its efforts to consistently improve shareholder returns. While we acknowledge the potential of FINV to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than FINV and that has 100x upside potential, check out our report about this cheapest AI stock. READ NEXT: and 11 Unstoppable Growth Stocks to Invest in Now 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
Yahoo
24-05-2025
- Business
- Yahoo
UBS Upgrades FinVolution (FINV) Stock, Lifts PT
On May 23, UBS upped FinVolution Group (NYSE:FINV)'s stock to Buy from Neutral, increasing the price target from $11.80 to $12.10. As per the firm's analyst, the company's Q1 2025 results were robust, thanks to the margin expansion and asset quality. The company was able to beat earnings estimates slightly, despite seasonally soft loan volume. An individual using a laptop to access the fintech platform to manage their finances. The growth momentum in operating profit was stronger, while the margin expansion was supported by a decline in funding cost, a slightly lengthened tenor, and improvement in asset quality, added UBS. Overall, the firm's upgrade stems from the better risk-reward profile. FinVolution Group (NYSE:FINV), which operates in the online consumer finance industry, saw total transaction volume of RMB52.1 billion, while outstanding loan balance increased to RMB74.1 billion, exhibiting YoY increases of 7.9% and 13.5%, respectively. The performance exhibited continued robust execution of the company's Local Excellence, Global Outlook strategy. Moving forward, FinVolution Group (NYSE:FINV) opines that its diversified and resilient business remains well-placed to navigate the current global macro uncertainties. Its total liquidity position, comprising cash and cash equivalents and short-term investments, was healthy at RMB8.5 billion. This exhibits a strong balance sheet, which aids ongoing operations and its efforts to consistently improve shareholder returns. While we acknowledge the potential of FINV to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than FINV and that has 100x upside potential, check out our report about this cheapest AI stock. READ NEXT: and 11 Unstoppable Growth Stocks to Invest in Now Disclosure: None.
Yahoo
22-05-2025
- Business
- Yahoo
Buy now, pay later pitfalls: Many consumers aren't paying loans
Klarna, a significant player in the buy now, pay later (BNPL) space, has faced losses in recent months as consumers failed to make payments on their loans. While Klarna's user base continued to grow in the first quarter, its losses more than doubled compared with a year earlier, the company said in its Monday earnings report. Its credit losses, when a borrower defaults on a loan, reached 17%. Consumers have continually leaned on companies such as Klarna, Affirm and Afterpay to give them more financial flexibility in the face of persisting inflation, high interest rates and student loan payments, which resumed in October 2023 after a pause due to the COVID-19 pandemic. Costco Rolls Out Buy Now, Pay Later For Big Online Purchases Through Affirm Consumers leverage the platforms because they allow for the option to pay in four interest-free installments every two weeks or, if approved, can make monthly payments over the course of six to 18 months, with interest (Afterpay only allows the four-installment plan). But experts have long warned though that these services can easily be a ticket to overspending. With Klarna, shoppers are able to split their purchase into multiple installments instead of paying the full amount upfront. Klarna fronts all the money upfront to the retailer and then takes money from a consumer-linked payment over an extended period of time. Read On The Fox Business App Risks Of Buy Now, Pay Later: 'Ticket To Overspending,' Expert Says If consumers don't have the money to pay, they get hit with a late fee. Another concern among experts is that getting approved for these services is also extraordinarily easy. For instance, just because someone is approved to use these loans doesn't guarantee that they have the financial means to pay them back, according to LendingTree's chief consumer finance analyst Matt Schulz. But these issues aren't unique to Klarna. More than 40% of users of BNPL loans say they paid late on one of them in the past year, up from 34% just a year ago, according to a LendingTree survey. According to LendingTree's BNPL Tracker, 39% of Americans were at least considering applying for a buy now, pay later loan in April, up eight points from March. This marked the biggest monthly jump since an eight-point increase in March 2023. Households haven't been in great shape as Americans' debt levels, including credit card debt, rose to new all-time highs in the fourth quarter of 2024, according to a report by the Federal Reserve Bank of New York in February. The report showed that overall household debt increased by $93 billion to $18.04 trillion at the end of 2024, an all-time high. Credit card balances rose by $45 billion from the prior quarter to reach $1.21 trillion at the end of December, which is also a record high. FOX Business' Eric Revell contributed to this report. Original article source: Buy now, pay later pitfalls: Many consumers aren't paying loans 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
