tag:blogger.com,1999:blog-4815867514277794362.post5919870687345041210..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: What is a non-performing loan?John Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-4815867514277794362.post-10925584776238055572009-03-06T23:42:00.000+11:002009-03-06T23:42:00.000+11:00Thank you sharing this interesting information.Non...Thank you sharing this interesting information.Non Performing Asset means an asset or account of borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset, in agreement with the directions or procedure relating to asset classification issued by Reserve Bank.<BR/><A HREF="http://www.ifciltd.com" REL="nofollow">www.ifciltd.com</A>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-30386531337224755032009-02-20T15:09:00.000+11:002009-02-20T15:09:00.000+11:00Many loans become non-performing after being in de...Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms you apply for.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-89524197840036740142009-01-31T17:23:00.000+11:002009-01-31T17:23:00.000+11:00I haven't checked whether your assertion is true.....I haven't checked whether your assertion is true... but I am very concerned about the mix of the NPAs. <BR/><BR/>Think about it this way. An individual has a mortgage that they hope to pay but are a little stretched. Their income is viable. They miss a payment. <BR/><BR/>Its better than 50% chance that they won't default. Actual payment is best correlated with wanting to pay. Moreover if you do default you will get at least 50% back. The right provision is BELOW NPAs.<BR/><BR/>Now if you have a large (say 10 million dollar) commercial loan which is unsecured. That will be paid come-what-may. And if it can't be paid there is generally NOTHING left. <BR/><BR/>So when it goes deliquent it probably defaults - and the severity is high.<BR/><BR/>Fifth Third's provisions have moved from the first camp to the second. That worries me.<BR/><BR/>JJohn Hemptonhttps://www.blogger.com/profile/03766274392122783128noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-89731562707487108422009-01-31T16:59:00.000+11:002009-01-31T16:59:00.000+11:00John,Are you concerned that the restructed loans i...John,<BR/><BR/>Are you concerned that the restructed loans inlcuded in the NPAs are only consumer loans? Could this suggest that either (i) no commercial loans have been restructured; (ii) commercial loans have been restructured but have not been included in the NPAs?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-25124404166266428242009-01-28T19:54:00.000+11:002009-01-28T19:54:00.000+11:00KevinI wish your comment were true. Unfortunately...Kevin<BR/><BR/>I wish your comment were true. Unfortunately Conseco did the lending OUTSIDE the insurance company - and they also deferred payment of loans (and counted as current) loans made within their regulated bank. (Yes they had a regulated bank that did store credit cards for Menards and others.)<BR/><BR/>The restructure thing is also done in banks. This is a self-assessed exam and the penalty for failure is death.<BR/><BR/>If you believe what Fifth Third said in their conference call the stock is a no brainer. But the company has an incentive to lie - as do all banks with severe problems... <BR/><BR/>Too trusting - that is what you are...<BR/><BR/>JJohn Hemptonhttps://www.blogger.com/profile/03766274392122783128noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-42819664100545451092009-01-28T14:56:00.000+11:002009-01-28T14:56:00.000+11:00Perhaps insurance companies had different rules or...Perhaps insurance companies had different rules or Conseco wasn't following them, but the accounting for modified loans has been pretty well settled since the last S&L crisis. A material modification is a Troubled Debt Restructure, which is a Non-Performing Asset until the payments have been made at least six months. As you suggest, I think Fifth Third may be doing some posturing by breaking their TDRs out of their NPAs. As far as I know there is no requirement to do so. Citigroup reported $12.7B in consumer NPAs for the 4Q 2008, it wouldn't be at all surprising if there were a bunch of TDRs in this category.<BR/><BR/>I wrote some more about this at <BR/><BR/>http://residentialpropertyanalytics.blogspot.com/2009/01/workouts-101-loan-modifications-and_27.htmlKevin Kleen rpakkleen@gmail.comhttps://www.blogger.com/profile/10196871115667216421noreply@blogger.com