Bank has little hope for economy
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Your support makes all the difference.MIDLAND'S executives did not mince words: there has been no let-up in the recession and its customers are suffering badly, writes Lisa Vaughan.
Sir Peter Walters, chairman, said: 'The bad debt charge (of pounds 355m) indicates that the recession is continuing to take a heavy toll on both business and personal customers, with many companies not yet responding to intensive care as we attempt to nurse them back to health.'
Midland estimated that it has some 300 UK companies in intensive care. Brian Pearse, chief executive, said: 'There are fewer companies in intensive care than at the beginning of the recession, but those in it are in a poorer financial state than they were half a year ago.'
The sharpest effects of the recession continued in London and the South-east, with a high proportion of Midland's new provisions in that region. Property and construction accounted for the largest proportion of provisions, 54 per cent, followed by manufacturing and distribution.
Sir Peter said he foresaw no respite in the difficult economic conditions. 'The construction industry, a motor of domestic economic activity, faces a very bleak future for the next year and a half,' he said.
Sir Peter's unexpectedly downbeat message that no economic recovery is in sight, combined with the decline in Midland's income, caused some stockbroker's analysts to begin downgrading their profit forecasts for the entire UK banking sector for 1992 and 1993.
Christopher Wheeler, banking analyst with Lehman Brothers International, said Midland's results indicated how sluggish activity has been. Lehman Brothers cut its estimate for Midland's 1992 profits from pounds 250m to pounds 175m.
Midland expected that a number of corporate customers who survive the recession may go under during the recovery, as their capital needs for expansion increase beyond their means.
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