The Hawaiian Economy through a Bank’s Financial Report The economy of Hawaii could be in for some tightening though the prospects are great for the prominent Bank of Hawaii, as its report indicates.
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The stock market is linked to the state of the economy, which is why traders always have their eyes and ears tuned to financial news and government policies. While direct access trading platforms offered by online brokers can help you trade smoothly, you also need to rely on analyst opinions and their interpretation of financial reports to help you make the right decisions. A bank’s earnings report can significantly contribute to explaining how the economy of the land is, even if it may be just a state of a country, particularly when it is geographically isolated from the mainland and needs a great deal of its own resources for its sustenance. The US state of Hawaii is a classic example of how such reports can guide those looking for investing in companies with significant business interests in the island state in the Pacific Ocean. Bank Expects Slower Growth for Hawaiian Economy As reported by Motley Fool’s Asit Sharma, the 2019 third-quarter financial results of the Bank of Hawaii ($BOH) have given us an insight into the future, primarily in the fact that the bank expects the economic cycle to tighten but the banking environment to be stable in 2020. The Hawaiian economy could be in for slower growth. In its third-quarter earnings report, the Bank of Hawaii reported stable results, among which noninterest income experienced acceleration in comparison to the prior year. It was just that the overall profitability dragged on a bit as a result of greater overhead expenses. Tourism and Commercial Real Estate Primary Income Sources The Hawaiian economy relies primarily on tourism as well as commercial real estate. In fact, one-fifth of the economy in Hawaii is made up of tourism, and is significantly isolated from mainland United States. Peter Ho, CEO of the Bank of Hawaii reckons that the Hawaiian economy is in a fairly stable condition. Unemployment rate is at 2.7%, which is lower than the national average at 3.5%. There has also been a rise in the arrival of visitors by 5.2%, in just this year’s first 8 months when compared to those of 2018, though there has also been a 0.5% dip in the daily tourist spend.
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Somewhat Mixed Results for Real Estate Ho also believes that the real estate market has continued to be active, with third-quarter growth in the sales of single-family homes in particular, 8.7% over the similar period in 2018. Year-todate sales are comparable with 2018 while median sales prices have been stable. Condo sales weren’t so positive though. Year-to-date condominium sales actually declined 6.7% when compared to the corresponding period in 2018. Median sales prices have slipped 1%. Inventory months at the end of the third quarter for single-family homes were 3.5 months, while for condominiums the inventory months were 3.9. The year-to-date (YTD) median market days were 23 days and 26 days for a single-family home and a condominium respectively. For the Bank of Hawaii, residential and commercial mortgages as well as home equity loans constitute 73% of its loan portfolio that amounts to $10.9 billion. Bank Management Confident The bank’s management is fully confident of its business prospects, and the stock has appreciated close to 34% YTD on the basis of total returns. This report of the Bank of Hawaii gives you a clear picture of what you can expect from the state’s economy. With zero brokerage trading offered by online brokers, it also isn’t hard to get started in stock trading.
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