US Bank Loan Approvals Dropping
WASHINGTON: Leading US banks are not lending as much as bankers and borrowers refrain from taking risks in the uncertain economy.
An analysis by the Journal showed the total loans held by 15 large US banks shrank by 2.8 percent in the second quarter, and that more than half of the loan volume in April and May came from refinancing mortgages and renewing credit to businesses and not fresh loans.
The banks surveyed include financial giants such as J.P. Morgan Chase, Bank of America and Citigroup as well as regional banks such as Fifth Third Bancorp, based in Cincinnati, and Regions Financial Corp. of Birmingham, Alabama.
The 15 banks hold 47 percent of federally insured deposits and got 182.5 billion dollars in taxpayer-funded capital infusions through the Troubled Asset Relief Program, the report said.
As of June 30, the banks had 4.2 trillion dollars of loans on their balance sheets, down from 4.3 trillion dollars on March 31.
Loan portfolios shrank at 13 of the big banks, with the steepest decline at Comerica Inc., Dallas, where the loan total was down 4.3 percent to 46.6 billion dollars in the latest quarter, the paper noted.
Bank of America reported its loan portfolio slipped 3.6 percent to 942.2 billion dollars in the second quarter, the report said.
A spokesman for the largest US bank by assets said the decrease reflected higher loan losses and lower loan demand as borrowers pay off outstanding debts.
“There were fewer opportunities to make high-quality loans because of the recession,” he said.
The 15 banks reported about 803 billion dollars in loan volume in the second quarter, up 12.7 percent from the first quarter, The Journal said.
But nearly 60 percent of the increase in April and May came from refinancing mortgages and renewing business loans, according to the report. In contrast, new home purchases accounted for just 23 percent of all mortgage loans.
On a year-to-year basis, total loans held by the 15 big banks rose 17 percent from 3.6 trillion dollars in the second quarter of last year, the paper reported.
But the increase was skewed by the impact of acquisitions that included J.P. Morgan’s takeover of the banking operations of Washington Mutual and Wachovia’s purchase by Wells Fargo Bank, it said.
Excluding purchases, loan portfolios shrank by about 10 percent as of June 30 from a year earlier, according to the report.
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US Bank Loan Approvals Dropping
Oil Higher in Asian Trade
SINGAPORE: Oil rose in Asian trade on Monday, with investor mood upbeat that the global economy was over the worst of the slump, analysts said.
In particular, a stronger-than-expected set of US corporate earnings has fuelled hopes that the world’s largest economy was on the mend from a recession that started late last year, they said.
New York’s main contract, light sweet crude for September delivery, put on 39 cents to 68.44 dollars a barrel.
Brent North Sea crude for September delivery was 38 cents firmer at 70.70 dollars.
“People concluded that Asia seems to have turned the corner — now the US is also thought to be recovering,” said Tony Nunan, a Tokyo-based manager with Mitsubishi Corp’s international petroleum business unit.
In Asia, a strong 7.9 percent surge in second quarter growth from China’s economy has bolstered hopes that the region is also starting to shake off the US-led global slump.
After the United States, China is the number two energy user in the world.
Crude prices have surged about 10 dollars in New York over the past two weeks, energised by strong US corporate earnings and economic data suggesting the US and other key economies are starting to recover.
However, Phil Flynn of PFG Best Research cautioned that the rise in oil prices was not supported by economic fundamentals.
“Oil has ignored bearish supply and demand fundamentals as the fundamentals of expectations of an improving economy seem to be a bit more exciting,” Flynn said.
“After this pop, oil will fall hard.”
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Oil Higher in Asian Trade
Microsoft Yahoo Deal
Microsoft Yahoo, Microsoft Corp. appears to have finally locked up rival Yahoo Inc. in a long-awaited Internet search partnership aimed at narrowing Google Inc.’s commanding lead in the most lucrative piece of the online advertising market.
The details of the Microsoft-Yahoo alliance are expected to be announced Wednesday, a person with knowledge of the talks told The Associated Press. This person spoke Tuesday night on condition on anonymity, confirming earlier reports, because the deal was not yet final.
Both Redmond, Wash.-based Microsoft and Sunnyvale, Calif.-based Yahoo declined to comment late Tuesday.
The deal may not be as far-reaching as many investors envisioned. It does not appear to call for Microsoft to pay Yahoo in advance, which could disappoint Wall Street. Yahoo Chief Executive Carol Bartz had said she would join forces with Microsoft only for “boatloads of money.”
Instead, the companies would share revenue generated by search ads on their Web sites. Yahoo would use Microsoft’s search engine, Bing, and it is likely – though not certain – that a “powered by Bing” message will appear on Yahoo’s highly trafficked pages, according to the person who described the talks to the AP.
The companies would also use Microsoft’s advertising technology to deliver appropriate ads alongside search results, while Yahoo will handle the ad sales and customer service.
The person with knowledge of the talks said it is not clear whether the final deal will also cover sales of billboard-style “display” ads, or what will happen to Microsoft’s own ad sales team.
Microsoft, the world’s largest software maker, has been courting Yahoo for several years in hopes of expanding its share of the lucrative online search market.
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Microsoft Yahoo Deal
