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Northern Ireland bank margins 'up to due economic uncertainty'

Wednesday, 14 January 2009

Bank margins on financial products have risen amid financial uncertainty, a Stormont committee heard today.

Profits have increased on new deals despite stiff competition between providers, the British Bankers' Association (BBA) said.

Homeowners and businesses have been feeling the pinch as banks have tightened criteria for lending money.

Representatives of the four main banks were grilled by the Finance Committee today.

BBA executive director Eric Leenders said: "We have seen margins and arrangement fees competed away and we are now seeing a correction and pricing more related to the risk going forward.

"For new deals there is certainly a widening of margin to what might be perhaps a more realistic level outside the constraints of that competition."

He said there was a reduced volume of applications for loans for investment.

"That I think is very much a consequence of confidence. One common theme is that a number of small businesses want to in effect wait and see what happens over the next six to 12 months.

"They don't want to commit to a capital expenditure programme that could prove quite difficult if the economy continues to deteriorate.

"There's a lot of pent-up demand that should flow through and I think one of the things that we could collectively consider is how to encourage businesses to consider investment plans albeit right now it is probably appropriate that liquidity and cashflow has to be their immediate priority."

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surely this comes as no surprise to any of us....

Posted by Andrew | 14.01.09, 13:20 GMT

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