Revised FDIC guidelines to adversely affect earnings of banks offering payday loans

03/09/05 - Stephens Inc.

LONDON, March 9 (newratings.com) – Analysts at Stephens Inc believe that the annual earnings of banks offering payday loans would be adversely affected by 8%-10% from 4Q05 onwards due to the revised FDIC guidelines.

In a research note published this morning, the analysts mention that the FDIC has revised its guidelines for the banks offering payday loans to include a provision restricting the amount of the loans a customer can take in any 12-month period from any lender. Although the revised guidelines are likely to adversely affect the earnings of banks offering payday loans, the recent share price decline in the share price of certain banks is overdone, the analysts believe. The demand for payday loans remain robust, Stephens Inc adds.