bearish

Q3 Earnings Boost Masks Longer-Term Hurdles for Major US Banks

12 Views31 Oct 2023 11:00

SUMMARY

Favorable earnings data in Q3 2023 has provided immediate, albeit marginal, improvement in the credit profiles of major US banks.
As the Federal Reserve (Fed) continues to maintain higher rates for longer, the profitability of most of the major US banks has benefited from higher interest income received on their outstanding loan book, while repricing the rates they pay on their deposit base more slowly, boosting their net interest margins (NIMs).
The common theme across most US major banks is that the current earnings growth, which beat market expectations and was followed by an increase in the total net interest income guidance for the year, is largely driven by the sustained tighter credit conditions brought on by the Fed.

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