IMF forecasting slowdown in Europe

WASHINGTON – The International Monetary Fund warned Wednesday that European banks are under pressure to preserve capital and could cut back sharply on lending over the next two years, slowing the region’s growth.

The predicted credit crunch is a major reason why Europe’s economy is expected to suffer a mild recession this year and barely grow in 2013, the IMF said in a report on the global financial system released Wednesday.

The 17 countries that use the euro will see their economies shrink by 0.3 percent this year, and expand by only 0.9 percent in 2013, the IMF has forecast.

But the slowdown could be worse if European governments don’t follow through on pledges to cut budget deficits and build up their bailout fund, the global lending organization said.

Large banks based in the European Union may reduce their balance sheets – which include outstanding loans, securities and other assets – by as much as $2.6 trillion through the end of 2013, the IMF said. That’s about 7 percent of their total assets.

About one-quarter of that reduction will come from reduced lending and could shrink the amount available for credit by 1.7 percent.

Taco Bell leads Yum’s restaurant rebound

LOUISVILLE, Ky. – Yum Brands Inc., owner of the Pizza Hut, Taco Bell and KFC chains, said Wednesday its first-quarter net income rose 73 percent due to a successful combo – continuing strong overseas sales packaged with a rebounding U.S. performance led by its once-struggling Taco Bell business.

Upbeat about its prospects in the U.S. and abroad, the company raised its earnings-per-share growth forecast for the full year to at least 12 percent, or at least $3.22 per share. It previously said it expected growth of at least 10 percent in 2012.

Sales from existing restaurants rose in the first quarter across its worldwide businesses, including a 5 percent overall gain in the U.S as Taco Bell showed signs of emerging from its slump last year. All three chains showed sales gains in the U.S.

Yum also kept up its fast-paced expansion overseas in the first three months. It added 168 new restaurants in China, a record number of openings in the first quarter there, the company said.

PayPal revenue growth boosts EBay income

NEW YORK – Ebay’s first-quarter net income grew 20 percent thanks to higher revenue from its PayPal business and its e-commerce websites.

EBay Inc. said Wednesday that it earned $570 million, or 44 cents per share, in the January-March period. That’s up from $476 million, or 36 cents per share, a year ago.

Adjusted earnings of 55 cents per share beat Wall Street’s estimates by 3 cents.

Revenue grew 29 percent to $3.28 billion from $2.55 billion.

Analysts, on average, had expected lower revenue of $3.15 billion, according to FactSet.