Chinese commercial banks suffer less bad loans

Non-performing loan ratio for major Chinese commercial banks dropped to 7.6 percent, down 1.3 percentage points over the beginning of the year.

Statistics with China Banking Regulatory Commission show that bad loans in the state commercial banks declined by 16.4 billion yuan to 1.1 trillion yuan by the end of September. The bad loan ratio reached 9.3 percent, down 1.2 percentage points over the beginning of the year.

Twelve joint-stock commercial banks reported bad loans of 116.8 billion yuan, a decline of 30.5 billion yuan over the beginning of the year. The bad loan ratio for them dropped 1.3 percentage points to 2.9 percent in the period.

Liu Mingkang, director of the commission, urged commercial banks to strengthen their efforts in reducing non-performing loans.

In the first nine months, Chinese financial institutions reported 724 lawbreaking cases, 190 fewer over the previous year.

Financial institutions in the banking sector should pay more attention to such cases, improve corporate governance and set up long-term mechanism of preventing risks, said Liu.

China is to fully open its financial sector by the end of this year according to its commitment to the World Trade Organization.

With the full entry of foreign banks, the outer environment of Chinese commercial banks would change greatly. They could only survive the market by enhancing income from businesses other than interest rate and improving capability of better performance and service to customers, said Liu.

Liu continued to say that commercial banks should try to change credit and loan structure, effectively control over-fast growth of mid and long-term loans, and develop credit services driving consumption.

China's economy has been in the risk of overheating. The government has taken a series of measures to cap its overheating investment and encourage consumption.

Bad debts increase as rate rises bite

A MAJOR internet bank yesterday reported a 40% jump in the number of loan customers turning to debt management companies over the past three months.

Amid industry concerns that UK consumers are struggling to meet commitments, Egg said levels of bad debt had been worse than expected in its loans and credit card business over the third quarter of the year.

Further signs of belt-tightening came from official figures showing lower retail sales. Credit card borrowing was down again last month.

It is expected that the total number of insolvencies this year will top 100,000.

One explanation for the increase is the trend for individual voluntary arrangements (IVA), which allow people to repay a set amount of their debts each month in exchange for having interest payments frozen.

This was confirmed yesterday by Egg's owner Prudential, which said there had been a "marked increase" in loan customers using IVAs, debt management companies and in some cases bankruptcy, to alleviate their debt burden.

It said the number of people using debt management companies in the three months to September 30 was up 40% on the previous quarter. Egg usually recovers less money from customers using IVA arrangements.

The Pru also noted lower than expected borrowing on Egg credit cards as customers cut back on spending.

As a result, the Pru now expects the Egg business to report an operating loss in the second half of the year, similar to the deficit seen in the first half. Egg made losses of £39m for the six months to June 30, compared with profits of £13m for 2005.

Pru said, "During the third quarter, Egg has been affected by a marked deterioration in market trends that are being seen across the banking sector."

The comments from Egg will add to signs that higher interest rates are starting to impact on spending habits.

The British Bankers' Association (BBA) said "noticeable weakness" in the consumer credit market had continued into September with a negligible rise in personal loans and overdrafts and a £76m drop in credit card lending.

Strategy for lowering credit card debt

The number one rule to reduce debt is “keep hope alive.” One important way to do this is to deal with the sense of guilt involved with having debt in the first place. It’s important to note that many of God’s finest people struggle with debt. According to The Dallas Morning News, the average student loan debt for a new pastor coming from seminary in 2001 was $25,018. If you have debt, you have a lot of company. We often start behind, and it is hard to catch up, especially for those in ministry. You have to be brave to even start addressing this issue.

A second way to keep hope alive is to tally all your debts. List the company’s name, balance, interest rate and monthly payment. Circle the lowest balance. Make it your first victim. Pay the other accounts their minimums and put all extra debt reduction efforts into paying off this account. When it is paid off, use this extra amount towards your next lowest balance.

Third, cut expenses. Drink water instead of tea. Eliminate unused or unnecessary services, such as premium cable or expensive cellular phone plans. Reducing expenses is easier than earning more income because new income is subject to both Social Security and income taxes. Consider: a person in the 15% income tax bracket must actually earn $12.27 extra to have $10 to use against debt because of taxes. Because of the unique tax status ministers face, they must make $12.80 extra to have that same $10 to attack the debt.

Finally, continue your generous giving to God’s kingdom. When we are under pressure, we need God’s blessings even more. Could there be a worst place to cut back than on our commitment to the God whose blessings we need so badly?

How to Shop for a Loan with Bad Credit

Just because you have bad credit (or think you do) doesn't mean you'll necessarily get turned down for a loan. Having a low credit score doesn't mean you're an undesired customer. In fact, many lenders do want your business, provided your credit isn't rock-bottom.

Check Your Credit Report and Score

You should already be checking your credit report for inaccuracies since a good majority of credit reports contain errors. But it's also important to find out what your credit score is. The higher it is, the better interest rate you can get and knowing your credit score can give you a better idea of where you may stand.

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