Economy

U.S regional bank shares rise on interest income, deposits stabilizing

Published

1 year ago

July 20, 2023

U.S regional bank shares rise on interest income, deposits stabilizing

© Reuters. Buildings are reflected in the window of an M&T Bank branch in New York August 27, 2012. M&T Bank Corp. said it would buy Hudson City Bancorp Inc in a stock and cash deal worth $3.7 billion, expanding its franchise in the eastern United States and taking

(Reuters) – Three major U.S. regional banks met or beat profit expectations on Wednesday as higher interest rates allowed them to charge more for loans, while deposits stabilized, sending shares across the sector up.

Investors have been anxiously awaiting regional bank second quarter earnings as they look for reassurance that the turmoil that rocked the sector earlier this year has finally passed.

M&T Bank Corporation (NYSE:) and Citizens Financial (NYSE:) Group both beat Wall Street estimates from charging clients higher interest rates after the U.S. Federal Reserve raised borrowing costs to rein in stubborn inflation.

M&T said net interest income (NII), which measures the difference between what banks earn on loans and pay out on deposits, surged 27% to $1.81 billion on the same quarter last year, while Citizens said its NII increased 5.5% to $1.59 billion. At US Bancorp (NYSE:), NII was up around 28%.

Big U.S. banks on Tuesday likewise said higher interest rates had helped boost second quarter profits, causing shares to spike, but a pullback in consumer spending, slower loan growth and increased deposit costs may cloud the sector outlook.

That sentiment was underscored by USB, which warned on Wednesday that now it now expects full-year NII to be between $17.5 billion and $18.0 billion, falling short of average analyst estimates of $18.1 billion, according to Refinitiv data.

M&T shares were up 2.6% and Citizens added 4.55% in morning trading, while US Bancorp was up 3%. The KBW Regional Bank Index and S&P regional bank index were each gaining nearly 2% in line with the broader market.

Zions Bancorp reports later on Wednesday, while Truist Financial (NYSE:), KeyCorp (NYSE:) and Fifth Third Bancorp (NASDAQ:) report on Thursday.

The results follow a tumultuous first quarter in which Silicon Valley Bank and two other lenders collapsed after deposit runs, leading panicked consumers to yank deposits from small banks and place them with bigger Wall Street players. That has forced some banks to offer consumers higher returns.

“For the regionals, the thought process was they were going to be pretty weak and they haven’t been so far,” said Dennis Dick, market structure analyst at Triple D Trading.

“After everything that we saw happening in the regional banking crisis a couple months ago, there were concerns about a lot of withdrawals, but I would say it has been better than expectations.”

M&T’s deposits rose to $162.1 billion from $159.1 billion at the end of the first quarter, but fell about 4.9% year-on-year. US Bancorp said total average deposits were at $497.27 billion, down 2.6% sequentially but up 9% on the year. At Citizens, deposits fell less than 1% sequentially to $173.2 billion.

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

12 months ago

December 26, 2023

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

Economy

China identifies second set of projects in $140 billion spending plan

Published

12 months ago

December 25, 2023

China identifies second set of projects in $140 billion spending plan

© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo

SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.

With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.

The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.

China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.

The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.

“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.

The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.

($1 = 7.1315 renminbi)

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

12 months ago

December 25, 2023

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.