Tuesday, Mar 24, 2009
How will the banks make money, going forward?
The Telegraph: UK mortgage lending at £1,200bn 'unmanageable', claims Cap Gemini banking report
Mortgage lending in the UK has reached "unmanageable" levels and must shrink as a proportion of national economic output if banks are to make home loans profitable again, a new report claims.
According to the annual world retail banking report from Cap Gemini, Unicredit and EFMA, mortgage lending has "exceeded reasonable limits" with the volume of debt running at 86pc of GDP – or about £1,200bn.
Posted by devo @ 06:34 PM (548 views) Add Comment
5 Comments
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1. mountain goat said...
"Very few mortgages today create any profits for [UK] banks," Mr Sheehan said.
Too right with some people are paying 1p a month.
2. devo said...
I wonder when and how Lloyds and RBS will next boast a quarterly profit?
3. paul said...
'Going forward'? Are the banks on the move, like The Crimson Permanent Assurance in Monty Python
or did you just mean 'in the future'?
4. devo said...
...or did you just mean 'in the future'?
Retro or what?
You'll be referring to the economic downturn as The Depression next.
5. bellwether said...
The uber bearish position on banks is not well thought through. Barclays, RBS, Goldman's, Wells Fargo Bank Corp of US, Citi have all doubled their market cap in a fortnight on the basis that the market is betting that actually things aren't as bad as everyone thinks.
There is some basis for this. The report suggests that mortgage lending has to fall aprx 25% as against GDP to become healthy. This is a huge sum but it is nothing compared to the holocaust that has been priced into banks.
Governments are giving and will continue to give banks money for nothing so the margins on lending will improve hugely particularly once fixed rates roll over.
From being criminally overvalued the problems with "toxic assets" now look overstated - there value in the end is simply the capacity of home owners to pay their mortgages. The assumption that all or even the majority of loans will go bad is off the mark.