This is actually good news because Nokia will get more net cash with cheap interest rates.
This year, banks have posted declines in their net interest margins as authorities have cut benchmark interest rates, funding costs have risen and demand for credit has cooled.
While an increase in prime loan rates will likely impact both interest income as well as interest expense for Wells Fargo, the fact that Wells Fargo derives the majority of its funding from low cost core deposits will help the firm restrain its interest expense even as interest rates increase and thus boost its net interest margins.
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Corporate profits also got a nice boost from declining interest rates: Net interest for corporations has fallen from 5% of sales in 1989 to 2% today.
Both the banks reported earnings growth, but the results suggested their core businesses and net interest margins were under pressure from low interest rates.
However, the net inflow of capital will put downward pressure on interest rates and will also stimulate job growth.
Net interest income was 16% lower than the same period last year reflecting a combination of lower interest rates and increased competition.
But in many countries the personal sector has more assets than debts at variable interest rates, so it is a net winner when rates rise.
First and foremost, ever-present low interest rates have squeezed bank profitability as measured by net interest margin, or the spread between what banks pay to borrow and what they're paid to lend.
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Now it may also be true that the financial markets would go into a tailspin if Congress bars the U.S. from net new borrowing a response that could sharply drive up interest rates.
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In the last quarter short term rates stabilized at a slightly higher level and the net interest margin (the difference between the interest they pay to depositors and that which they are paid for them) widened.
But with interest rates falling, General Growth has posted remarkable earnings and net asset value growth.
The Federal Reserve has slashed interest rates, pumped liquidity into markets and spun a new safety net for investment banks.
Steep falls in interest rates in Poland and the Czech Republic have squeezed the banks' net interest income.
This decline in the anticipated first quarter EPS points to the effect of the European sovereign debt crises, slowing growth in the Asia-Pacific region and the weak economic environment in the U.S. In addition, the company faces increased pressure on its net income on account of higher pension contributions, which have increased as a result of historically low interest rates.
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Some of it involves printing money, disguised by accounting tricks: while the government's net debt is falling its gross debt is rising, and its deficit helps to keep Brazil's interest rates high (though they are lower than a decade ago).
Personally, Steinhardt is net short the bond market, reflecting his feeling that the stock market is going to continue recovering, and interest rates may have hit their lows.
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