QUOTE OF THE DAY
“The main purpose of the call for a ban on new government buildings is largely symbolic in that these are a highly visible sign of [Chinese] officials misusing public monies.”
Andrew Wedeman, Georgia State University political science professor Article, 1D
Mortgage business thins Regions profit
Regions Financial Corp., Alabama’s largest bank, said second-quarter profit fell as mortgage revenue declined and expenses increased on costs related to early debt repayment.
Net income slid 25 percent to $267 million, or 18 cents a share, from $355 million, or 20 cents, a year earlier, the Birmingham, Ala.-based lender said Tuesday in a statement.
Mortgage revenue fell 23 percent to the lowest level in six quarters, while noninterest expenses rose 5 percent to $884 million, including $56 million in early debt-repayment costs.
The bank, led by Chief Executive Officer Grayson Hall, said it expects full-year expenses to be lower than 2012.
“We realize in this environment, given the economy and given reduced demand for some of our products and services, we really have to be disciplined around expense management, and we will continue to do that,” Hall, 56, said on a conference call with analysts.
Twenty-seven analysts surveyed by Bloomberg estimated per-share earnings of 21 cents. Regions said “several liability management activities” reduced earnings by 3 cents, according to the statement.
Regions had 97 branches and $4.3 billion in deposits in Arkansas as of June last year, the most recent information available. Only Arvest Bank is larger in Arkansas.
Regions shares were unchanged Tuesday, closing at $10.42.
- Bloomberg News
Africa’s potential draws hotel operators
Marriott International Inc., Starwood Hotels & Resorts Worldwide Inc. and Hilton Worldwide Inc. are turning to Africa, where a growing middle class is fueling the fastest pace of hotel development in the world.
Marriott has increased the number of hotel rooms it plans on the continent by 55 percent from last year. For Starwood, revenue per available room in Africa and the Middle East is the highest of any region worldwide. The high-end Transcorp Hilton Abuja, in Nigeria’s capital, commands some of the steepest management fees in the world for its operator, according to Lagos, Nigeria-based hotel-consulting firm W Hospitality Group.
Hotel investors and operators, finding growth slowing in mature European and U.S. markets, are expanding in Africa as the continent is buoyed by increasing trade with countries including China and rising demand for services such as lodging. More than half of Africa’s countries probably will post gross domestic product growth of 5 percent annually through 2016, Economist Intelligence Unit Ltd. said.
- Bloomberg News
Ponzi scam used bitcoins, SEC suit says
The U.S. Securities and Exchange Commission has sued a Texas man claiming he operated a Ponzi scheme involving Bitcoin, the virtual currency that has recently attracted investors including Tyler and Cameron Winklevoss.
Trendon T. Shavers raised at least 700,000 bitcoins starting no later than September 2011 through his firm Bitcoin Savings and Trust and improperly used currency from new investors to cover investor withdrawals, the SEC said in a complaint filed Tuesday in federal court in Texas.
Shavers falsely promised investors as much as 7 percent interest weekly on purported trades, including selling the online currency to individuals who wished to buy it “off the radar,” quickly or in large quantities, the SEC said.
Shavers also misappropriated investors’ funds for his personal use, according to the complaint.
The SEC said the 700,000 bitcoins that Shavers raised amounted to more than $4.5 million, based on the average price of bitcoins in 2011 and 2012 when the investments were offered and sold. Today, the value of 700,000 bitcoins exceeds $60 million, the SEC said.
Bitcoin is a virtual currency created four years ago that can be used to buy and sell a broad array of items, from electronics to illegal narcotics. The Winkelvoss brothers, who became well-known for their clashes with Mark Zuckerberg over the origination of Facebook Inc., offered 1 million shares in a trust that would track the price of bitcoins, according to a filing with the SEC.
- Bloomberg News
European directive due on 787 beacon
Boeing Co. 787 operators in Europe are to get direction soon on what to do with an emergency locator beacon after British aviation-safety officials called for the device to be disabled after a July 12 Dreamliner fire.
The Cologne, Germany-based European Aviation Safety Agency is still working on an airworthiness directive, which it expects to issue in “the next days,” according to an emailed response to questions. The order will apply to all European 787 operators.
The U.K. Air Accidents Investigation Branch has recommended that the U.S. Federal Aviation Administration direct airlines to disable Honeywell International Inc.
beacons on all 787s after the fire on an Ethiopian Airlines Enterprise jet at London’s Heathrow airport. Investigators are said to be investigating whether a pinched wire caused a short-circuit that triggered the event.
- Bloomberg News
Economy in flux, Chinese analyst warns
China’s economy is likely heading for a period of instability as it shifts from high-speed growth, a state researcher said Monday.
“Growth inertia should not be underestimated, as new growth engines and patterns have not been formed,” researcher Yu Bin said in a report by China’s Development Research Center. “Market expectations are unstable, downward pressure has increased, and existing and new structural mismatches exist. The economy has become unstable and uncertain like never before.”
China’s growth slowed for a second straight quarter to 7.5 percent in the April-June period, increasing the risk that Premier Li Keqiang will miss a full-year target for the same pace. Reports in Chinese media indicating that Li will act to support expansion if needed helped send the Shanghai Composite Index up 2 percent Monday. Some analysts claim China’s reported GDP number is inflated.
The Development Research Center is an agency advising China’s Cabinet, and Yu said that if China can maintain “an appropriate macroeconomic environment,” start suitable changes and control risks, “the growth rate for 2013 can approach 7.5 percent.”
Business, Pages 26 on 07/24/2013