ONE-FIFTH OF ALL CREDIT UNION LOANS ARE NOW IN ARREARS - Large chunks of the loan books of credit unions are not being repaid, but there is some evidence of an improvement in the arrears situation. Regulator for the sector Sharon Donnery told credit union managers yesterday that 20% of the value of all loans were in arrears, writes the Irish Independent. The value of credit union loans has fallen by 11% to €4.6 billion for the 400 credit unions in the State up to June last year. This means that the value of arrears is €920m. Ms Donnery said: "Average sector arrears were slightly over 20%." The overall arrears figure had been higher, at close to €1 billion in 2011. But a fall in the overall value of all credit union loans has meant the euro value of the arrears is down. Loans are maturing faster than new ones being taken out, as people are taking out fewer loans because they fear that lower incomes and higher state taxes and charges mean they will not be able to repay credit union borrowings. Ms Donnery said: "Credit unions continue to face significant challenges to their business model." Average dividends, or interest paid on savings, were below 1% last year, the credit union registrar told the Credit Union Managers Association.
SMURFIT KAPPA FORECASTS REVENUE BOOST - Smurfit Kappa Group has estimated that annual revenue contribution from its markets outside of Western Europe will nearly double over the next two years, reports the Irish Examiner. Addressing media at a strategy and outlook briefing in Dublin yesterday, the paper and packaging giant’s management team said it anticipates revenues from non-Western European markets to represent a combined 40% of group annual sales by 2015. Currently, SKG’s operations outside of Western Europe make up 23% of overall revenue; 19% in the Americas and 4% from Eastern Europe. Western Europe remains dominant, with a 77% contribution rate. However, by the time of the group’s 2015 full- year earnings presentation; Western Europe is likely to represent 60% of overall group revenue, with other markets contributing 40% of sales; the Americas making up 30% of that. Management also reiterated its intention to sustain a progressive dividend policy - previously alluded to at its AGM in May. Yesterday, chief financial officer Ian Curley stated that as profits grow, dividends will grow; while CEO, Gary McGann noted that the business is “now, squarely, back in the zone of looking at shareholders’ best interests”.
KBC RISKS STAYING A MINNOW DESPITE PLAN FOR PERSONAL CURRENT ACCOUNTS - KBC Bank Ireland yesterday announced its plans to offer personal current accounts here, backed up by a Mastercard debit card. Chief executive John Reynolds quipped that it was 40 years in the making given that’s how long the Belgian bank has operated here, says the Irish Times. KBC traditionally focused on mortgages and business banking in Ireland. It all went swimmingly for the first 36 years as the bank never missed a profit. However, it came unstuck in a big way when the economy crashed in 2008. Just under one in three of KBC’s €3.1 billion buy-to-let mortgage book in Ireland is in arrears, along with 18.8% of its €9.2 billion book of owner-occupied home loans. Its Irish losses in the second quarter narrowed to €69 million from €95 million a year earlier and Reynolds expects that arrears problem will peak some time in the first half of next year. Reynolds hopes KBC will secure a 10% market share of current accounts, about its level in mortgages. Over the past 18 months it has vacuumed up some €2.7 billion in deposits here and says it has 150,000 personal customers.
INVESTORS CAST DOUBT ON MICROSOFT DEAL - Microsoft ran into a wall of scepticism on Tuesday over its belated jump to compete against Apple and Samsung in the smartphone business with a €5.4 billion deal to buy Nokia’s handset operations and license the Finnish company’s patents. The Financial Times says the deal also seals the eclipse of one of Europe’s leading technology champions, ending Nokia’s three decade-long attempt to build a consumer brand that saw it become the world’s biggest manufacturer of mobile handsets, but which also brought it to the edge of financial ruin. Nokia said it would refocus around its telecoms infrastructure business, in the latest dramatic change in the company’s turbulent 148-year history. Doubts about Microsoft’s chances of becoming a serious challenger in the booming smartphone business led to a drop of more than 4.5% in its share price on Tuesday, wiping more than $11 billion from its market value. The US software company has become increasingly dependent on Nokia for sales of its Windows Phone software as other hardware makers have withdrawn, leaving its mobile software a distant third to Apple and Google. Nokia’s shares, meanwhile, jumped 34% amid investors’ relief that it had escaped the lossmaking handset market and found a solution to the increasing financial stresses it was facing.