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With news that Strategic Finance has reported a 21.5% increase in net profit for the six months to December 31. It has also reassured investors it has $101.8 million of cash on hand and is still growing its loan book and its depositors funds.
However, Strategic Finance is also feeling the pressure in a finance company sector that has lost 14 of its members to receiverships in the last 20 months. Strategic's reinvestment rate was at 51% in January and it has just increased its secured debenture rates over 10% for the first time. Strategic joins Hanover Finance, which did the same thing last week as finance companies have to work harder to attract funds from depositors in an environment where you can get 9% for a one year deposit at the government Kiwibank.
Meanwhile, overnight the chairman of the US Federal Reserve dropped more hints that he will cut official interest rates again next month, although he was surprisingly confident about the economic outlook and actually predicted growth would rebound later this year. The comments were seen as less definite about a rate cut than previous comments, so the Dow fell 1%.
And in another shock overnight in the global credit crunch, UBS has unveiled it has over US$30 billion more of loans exposed to dodgy credit markets. It hasn't said how much of them are in trouble, but apparently the Singapore government which bailed out UBS late last year after it declared over $10 billion of sub-prime losses is getting nervous about having to throw more money into the Swiss black hole.
That was 90 seconds at 9 o'clock. I'm Bernard Hickey for interest.co.nz
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