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Retail lending Edict — Duration Risk & Credit Risk

CFO News

Ashish Goyal, Co-founder & CFO of Fibe, explores the critical decision fund managers face between duration and credit risk in financial management. Balancing these risks is essential for optimal outcomes in diverse economic landscapes.

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Global credit risks rise: "Triple threats" to stay

Future CFO

Global credit risks have risen over the past quarter as the triple threat of rate rises, Europe’s gas crisis and China’s moribund property market show no sign of abating, said Fitch Ratings recently. According to the firm, its list of key global credit risks has also been updated to reflect the evolving environment.

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China's policy shifts to targeting recovery in domestic demand  

Future CFO

At annual meetings of China's (A1 stable) top legislative and advisory bodies, policymakers set an economic growth target for 2023 of 5%, which Moody’s said is in line with its growth forecast. This will limit the increase in RLG debt risk in China and leverage risk for state-owned infrastructure companies, the firm added.

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Optimism in Asia: Firms expect demand surge in coming months

Future CFO

There’s a pinch of optimism in Asia despite global economic uncertainty. More than 50% of companies in the region revealed that they increased efforts to collect overdue B2B invoices during the past 12 months, a policy complemented in each market by specific credit risk management tactics, the firm said.

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Building resilience with financial readiness

Future CFO

At the time of this crisis, where uncertainty takes centre stage, organisations are looking at the CFO to ensure business continuity. Liquidity and credit risk Cash has always been king and this saying was never so relevant as it is in the current situation. And yes, this formula will stick in the next normal as well.

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How China’s tighter fintech regulation poses mixed implications

Future CFO

Strong policy incentives to encourage future fintech innovations that support economic development and financial inclusion will remain,”Li noted. The credit impact will be mixed across fintech firms, financial institutions and the securitisation market in China , the credit rating agency said.

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Payment behaviours likely to deteriorate in 2023 

Future CFO

Indeed, in a context of slowing economic activity, oversupply in manufacturing sectors and tightening financial conditions, inventories are likely to decrease while payment delays should increase as in previous economic downturns. Both DSO and DPO should increase slightly (+5 combined) while DIO should decrease by about the same.