Friday tips round-up: UK Banks, Cranswick

The loan loss ratio for UK banks stood at 0.14% at the end of 2014 according to Standard&Poor's, versus 0.69% in 2013 - a rare positive for the sector. It is a reflection of faster economic growth, low interest rates, higher property prices, banks' sale of dodgy property loans, lending deemed problematic mid-crisis that came right and fewer bad loans in general.However, that cheery picture is misleading. It should be seen as a vital warning sign of looming problems at a bank. The loan loss ratio on mortgages and corporate lending plummeted to just four basis points, but the ratio on consumer credit was a much higher 2.05%. Consumer lending is expected to accelerate this year, which S&P thinks will drive up credit losses. Should taxes rises after the election or if interest rates begin to climb, then consumer stress could return, says the Financial Times' Lex column.Strong demand from China provides support for the investment case at Cranswick. Growing exports and the sausage maker's decision to pass on the drop in the price of pork to consumers has boosted its sales volumes. Thus, fourth quarter sales were higher by 4%. The company has also expanded into poultry by acquiring Benson Park, one of the main suppliers to Leon and Pret A Manger. China consumes more pork than the rest of the world combined.Each week Cranswick ships out 1,000 tonnes of trotters, bones and tripe to the Far East. Revenue growth will taper off in fiscal 2016 as hog prices fall, but declining prices for key inputs like pig feed will prop up the firm's margins. In due time, those margins will be passed on to retailers, yet they will likely be stable over the next year. The balance sheet is also sound. Net debt is expected to hold at approximately £17m at year-end, the same as last year despite the purchase of Benson Park and increased investments. A steady rise in the share price seems to lie ahead even after their recent strong run. "Hold for income," says The Times's Tempus.