Quote Originally Posted by Roger View Post
Much depends on the state of the economy and how it affets on-going levels of loan deliquencies. I'm in the double dip camp and think there will be plenty of new deliquencies this current financial year as well as further provisioning required on existing doubtful receiveables. I think the liklihood of SCF making a profit for the year ended 30 June 2011 is extremly slim, assuming they last that long.
There are two aspects to this ...

Either:

If the economy improves, interest rates will rise ... there will be pressure on SCF margins.

Or:

If the economy dips, interest rates will not rise, but defaults in the receivables will rise.

If I were Sandy Maier, out of the two, I'd actually prefer to face the second issue, rather than the first. The basic reason is that I will not be seeking to grow my loan book until the very end of the restructure process. He is not looking to chase new business and he has already had a good hard look at the business he already has. If he can stay static, in business size, during a "dip" - this buys him time to complete the capital adequacy restructure. An interest rate rise takes time away from him.