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SME Savings Tracker Reveals Banks Have Reduced Average Interest Rates for Small Business Customers Richard Davies, CEO of Allica Bank, said: “Every month our tracker continues to show that British SMEs are being ripped off when it comes to their business savings. We hope that by bringing attention to this issue we can start to change things for the better and help business owners across the UK to make the most of their savings. “There are more than five million SMEs in the UK who bring huge value to the UK economy and our communities. It’s time they were given the banking they deserve.”   https://lnkd.in/ea-ybst9 #fintech #finance #banking #paytech #payments #fintechnews #paymentsnews

SME Customers Losing Out on £2,157 of Extra Interest Each Year Because Big Banks Aren’t Passing on Savings Rates Richard Davies, CEO of Allica Bank, said: “Allica’s goal is to help SMEs succeed and make the most of their hard-earned cash, which is why we are calling for a shake-up to the business savings market. It’s a tough time to be an SME in the UK and the last thing small business owners need is to be shortchanged on their savings – many without even knowing it. “Our Monthly Savings Tracker measures the extent to which SMEs are being ripped off on their savings. We hope that by continuing to track and spread the word we can help change things for the better and get SMEs the banking they deserve.” https://lnkd.in/eJjJEf6e #fintech #finance #banking #paytech #payments #fintechnews #paymentsnews

Allica Bank: UK SMEs Left 'Ripped Off' as High Street Banks Fail to Increase Savings Interest Rates: However, challenger banks are bucking this trend, and are offering rates of up to 4.33 per cent on the same cash. This means that the average SME with ...

Big Banks Denying UK SMEs Vital Cash as the Savings Gap Grows Again Richard Davies, CEO of Allica Bank, said: “Our latest data continues to underscore the need for an overhaul of the status quo, as UK SMEs continue to be short-changed by the big banks and their meagre interest rates. With the savings gap once again breaching 3%, there has never been a more appropriate moment to make steps towards a more transparent savings market. “The current state of the market means that the average UK SME is missing out on an average of £2,268 a year. For more established SMEs, the impact of this can be even greater. According to our data, a business with £1 million in the bank would be losing out on an average of £30,200 if it banks with one of the big six. “Business banking needs to change for the better – and we can start by making sure that all businesses have a clear picture about how to get the best deal on their savings. Better rates are out there – but customers need to know where to look.” https://lnkd.in/e3V7BRSs Philippa Gerrard Chloe Fenton (née Vaidya) Pragyani Bora Carlie Southworth James Heath Conrad Ford Grant Brown #fintech #finance #banking #paytech #payments #fintechnews #paymentsnews

New SME Savings Tracker Reveals Massive and Persistent Gap in Savings Rates Offered to SMEs by Big Banks Compared to Digital and Challenger Banks Richard Davies, CEO of Allica Bank said: “Allica is determined to get a better deal for the country’s hard-working SMEs, which are being severely short-changed by a broken savings market. It makes no sense to see such a big gap between the rates offered by challenger banks and the large high street banks – and to see that gap jump by 13% in the last month alone shows how out of touch many of the banks are with SMEs and the pressures they face from the cost of business crisis. “It’s high time we saw action taken to make the big banks pass on more savings interest to their SME customers. As it stands, SMEs are losing thousands of pounds leaving their savings languishing in low interest accounts with the big banks.” https://lnkd.in/eevAgDwq #fintech #finance #banking #paytech #payments #fintechnews #paymentsnews

The Message Is Clear: When It Comes to Savings High Street Banks Still Take Small Business Customers for Granted Richard Davies, CEO of Allica Bank, said:  “Our data has shown a significant and continued gap between the rates SMEs are offered by challenger banks and their larger, incumbent competitors. For more established SMEs especially, who will have larger amounts of cash on the balance sheet, this difference can have a massive impact. In today’s high-cost environment, this could be the difference between adding an extra member of staff, or investing in new equipment. “As the UK economy stabilises after years of uncertainty, there’s little excuse I can see for this continued poor treatment of SMEs and their savings from our biggest high street banking names. And with the BoE lowering base rates yesterday, we’ll be keeping a close eye to see if the disparity improves. “We want to see SMEs get the cash they are owed and for business banking to change for the better.” https://lnkd.in/epwUHcXj Jack McClelland Chloe Fenton (née Vaidya) Lee Mannion Joe Jones Georgie Burks #fintech #finance #banking #paytech #payments #fintechnews #paymentsnews

iwoca’s analysis of the Bank of England’s data also shows that the total value of lending to SMEs from high street banks fell by over a billion pounds over the last year. Overall, gross bank lending to SMEs declined sharply from £15.5 billion in Q1 2023 to £14.2bn in Q1 2024. This leads to a very stark conclusion that large UK banks are simply not interested in meeting the demand for SME financing and that the iwoca’s SME Expert Index finds that almost nine in ten brokers (86%) predict that demand for SME finance will rise over the next six months. However, brokers say that they do not expect high street banks to meet this demand, with over two-thirds (68%) predicting that banks’ appetites for lending to SMEs will continue to decline, up from 65% in Q4 2023. With traditional banking routes for SME finance continuing to shrink, just 25% of brokers say that they have a positive view of high street banks, while nearly half (49%) hold a negative view. This lack of interest has to almost certainly lead to lower lending volumes to UK SMEs and the factoring industry needs to step up to the plate and serve them. The importance of our industry should be more apparent than ever before, and I am confident the industry will do its part to help UK SMEs not just survive but thrive. Source: https://lnkd.in/gvSCAjwj

Two recent reports and speeches give us an indication of the Australian banking marketplace, ("PWC Major Bank analysis" Nov 2024 and Christopher Kent Assistant Governor RBA "The Financial system and monetary policy in Australia" Nov 2024, links attached)   1. Highlights to us that the major source of revenue for Australia's major banks in 2024 was interest income. Non-interest income for the Major Australian banks is below 18%. Compare this with France where non-interest income is above the 60% mark (PWC report)   2. Points out to us that the vast majority of Australia's loans are variable rate loans. Compare that with France where the vast majority of loans are long term fixed rate loans greater than 10 years fixed. (Christopher Kent's speech)   3. Points out to us that this "interest income" is attracting a lot of capital from different places. Major banks share of lending has declined from 75% in January 2018 to around 66% in September 2024. (We can see that Major banks market share in lending has been on an upward trajectory since Jan 23.) Non Majors (8.1%) and Non-Bank Financial Institutions (9.7%) are growing market share at a faster rate than major banks (4.9%). One must thought take into account the fact that the major banks lending books are so large that 4.9% in $ value terms would be very significant indeed. (PWC report)   4. Points out to us that Net interest margin has dropped from 1.87 to 1.81 across the major Australian banks. This can of course be attributed to the above point. As more players enter the market, competition intensifies. The major contributors to this drop in net interest margin is attributed to lending and deposit costs.   So what can we infer ?   - A very high propensity of variable rate loan creates high levels of interest income   - This interest income attracts more new players   - This reduces net margins due to increased competition.   So what happens if we can have long term fixed rate loans like France and US ? Will it change the above scenario ? Both France and US have banks that have more than 50% of income coming from non-interest income ? https://lnkd.in/gD_ppsRg https://lnkd.in/gt_Ybw4f

"Credit can be a driver of economic growth, especially given the tight situation SL is currently in". While there has been some increase in credit growth, the recovery has been quite messy. To understand why we are not seeing significant improvements in the economy, there are several factors at play. 1. Just as I mentioned earlier in my post https://lnkd.in/gexyhS_H , banks have been more conservative in their willingness to lend. Despite improved liquidity, we haven't seen much of this cash going into lending. Instead, banks have invested in g-secs. This means that the overall credit available for the private sector is limited. 2. Another interesting aspect is that the majority of new lending has gone to the banks' prime customers. https://lnkd.in/gMW2eNdk, The governor highlighted this in the recent monetary policy review. Banks have shown more willingness to lend to their prime customers rather than providing new lending more broadly. Comparing the AWPLR and AWNLR, the AWPLR reduced by about 1700 bps from the end of 2022 to March 2024, while the AWNLR only came down by 1300 bps indicating that banks have been more lenient towards providing credit to their prime customers as opposed to new borrowers. 3. Points 1 and 2 create an environment that constrains economic growth. For a quick economic recovery, new lending should ideally go to new businesses and business expansions, which would create more job opportunities hence increasing consumer demand, and boosting overall consumption. Right now what we are seeing is just marginal growth in the economy due to the lack of credit going into new businesses 4. Another constraining factor is the capital buffers banks have for lending. After charging high levels of impairment in previous quarters, banks have had thin capital buffers. We observed some capital-raising activities across the sector, especially in the last quarter of 2023. This is another bottleneck slowing credit growth, as banks are more cautious about taking on new risks. I personally believe that, as the IMF has highlighted, recapitalizing the banking sector could lead to some growth in credit over the next few months. However, there is limited space for low rates in the coming months due to increased government repayments. Despite this, we can expect credit to grow with an overall improvement in consumption. The CBSL's credit supply survey https://lnkd.in/gA69t6Tb also indicated that there's a high likelihood that banks will be more willing to lend in the succeeding quarters overall painting a positive picture while still there's some risks involved due to uncertainty involved in the election period. (This is based on work done by Anjali Hewapathage and Frontier Research (Pvt) Ltd, Sri Lanka team, while the opinions represented here are solely my own)

Very much in agreement with what Navinda Meepe highlights in his post; bank recapitalization is key to spur credit growth. On this end, there are two things we are watching out for; state bank recapitalization and the National Credit Guarantee Institution (NCGI). Recapitalizing state banks is especially important given that approx. 50% of the total credit by LCBs to the private sector come from the two largest state banks. If the Rs. 450 Bn allocated for state bank recapitalization in the Budget for 2024 comes through by end-August (a structural benchmark in the IMF program), that could potentially incentivize more proactive lending to the real sector. There's also the ADB funding of USD 50 million as the Government's initial equity injection to the NCGI, which is expected to provide partial credit guarantees on loans to SMEs with inadequate or no collateral [https://lnkd.in/g5kuj4ss]. Asset quality has continuously seen pressures in the banking sector, and partial credit guarantees could potentially ease lenders' NPL concerns to some extent at least. Based on the work that is done by the team at Frontier Research (Pvt) Ltd, Sri Lanka on the outlook for private sector credit and consumer demand.