Following closely on the heels of a couple of banks’ announcements of an upsurge in their bad debts, the Royal Bank of Scotland (RBS) also registered a marked increase in its credit card arrears, raising apprehensions of the bank falling prey to the scaling borrowing tendencies in the country that was leading to increased cases of default.
Nevertheless, RBS asserted that there was “no cause for worry”, in spite of a rise in its bad debt provisions since it had managed to pull through a robust performance through the first half of 2005.
Whatever the case may be, it is becoming increasingly apparent that debt levels are rising indiscriminately in view of the recent warnings that banks sent out after recording high outstanding card payments. Just a couple of weeks ago, Barclays disclosed that the number of defaulters had increased because of which the bank’s provisions to cover bad debts would also rise considerably.
Barely a week later, HSBC went on to reveal that a “noticeable” rise in bad debts had been seen, although it had not crossed manageable limits. Very soon, HBOS followed suit and declared a rise in its arrears along with an increase in its debt provisions.
The aforementioned debt scene seems quite anticipated and natural considering the whopping levels net borrowing to people has reached, with mortgages and loans transcending the appalling £1 trillion point.
Meanwhile, RBS said while admitting its rise in bad debt provisions, “Provisions in UK retail markets have risen, reflecting both growth in lending and increased credit card arrears, which, while higher than the historically low levels seen in recent years, remain within normal parameters.”
The chief executive of RBS, Sir Fred Goodwin, was quoted as saying, “What we have been seeing at this point would be closer to more normal levels. There's nothing to make us wish we had not done the business in the first place.”
RBS further informed that a slump had been noticed in its retail set up due to decreased unsecured lending since consumer spending and growth was down in the dumps, resulting in a minimal amount of personal loans.
However, the bank’s North American arm, Citizens, is flying high and has recorded a sturdy income growth.
Posted
on : Sat, 11 Jun 2005 07:05 GMT | Debt News
By : Rob Davis
|
