To help you understand what is going on in the banking and finance sector our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
Regional banks aren’t out of the woods yet. Their stocks were hammered recently after news of New York Community Bank's (NYCB) big fourth-quarter loss led the bank’s shares to fall about 60%.
NYCB is unusual in its role as a major lender to rent-stabilized landlords in New York City. Most of its total multifamily loan book is secured by properties in New York state, many of which are subject to rent control. Big drops in the values of office buildings will put pressure on some banks. Expect delinquency rates on commercial mortgage-backed securities to double in 2024.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
On a more positive note, deposit outflows from small and midsize banks have slowed. Depositors appear less concerned with losing uninsured money after regulators stepped in early last year to insure all deposits at Silicon Valley Bank and First Republic Bank. Net interest income (NII) — the difference between what banks earn from lending and pay out on deposits — will likely fall for most regional banks this year, as they will have to pay more to depositors. How much depends on how much longer interest rates stay high. Large banks should avoid the stock sell-off because they are more diversified and have set aside greater reserves to cover potential loan losses than smaller banks.
Banks are still tightening lending standards, but at a slower pace, according to the latest survey of senior loan officers. Also, the share of banks that are doing so has fallen considerably after peaking after last spring’s crisis of regional bank failures. A less favorable and uncertain economic outlook, worsening in credit quality of loans, and lower collateral values are among the top cited concerns. Businesses’ demand for credit keeps falling, especially among small firms.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Related Content
-
The Clock Is Ticking on Tax Cuts: Act Now to Avoid Missing OutEstate and gift tax exemptions are at an all-time high until the end of 2025. That may seem like a long way off, but setting things up could take longer than expected.
-
Should an ESOP Be Your Only Retirement Account?
When it comes to saving for retirement, diversification is critical. Consider building your nest egg with a combination of accounts in addition to an ESOP.
-
H-1B Work Visa Rules Get a Revamp
The Kiplinger Letter H-1B visas allow employers to hire high-skilled foreign workers. Regulators have finalized new rules for this visa program following last fall's proposal.
-
When's the Best Time to Buy a Domestic Flight? The Kiplinger Letter
The Kiplinger Letter A new study by CheapAir.com has crunched the numbers.
-
Are College Athletes Employees of Their Schools?: The Kiplinger Letter
The Kiplinger Letter A recent ruling has ramifications for labor relations and the unionization of student athletes.
-
How to Report QCDs on Your Tax Return: The Tax Letter
The Tax Letter Qualified charitable distributions, otherwise known as QCDs, can be tricky when it comes to tax reporting. We've got some pointers to help with filing.
-
Salton Sea Clean Energy and Lithium Project Gets Approval: The Kiplinger Letter
The Kiplinger Letter California's Salton Sea is due to see the construction of a new lithium extraction and geothermal clean energy power plant.
-
More Woes for Anheuser-Busch as a Strike Looms: The Kiplinger Letter
The Kiplinger Letter Drinkers of Anheuser-Busch beers may want to stock up soon. A looming strike threatens to shutter its U.S. breweries later this month.
-
Anxious Flyers Take Note: The Kiplinger Letter
The Kiplinger Letter Whether it's the routes to avoid that have the most turbulence or the safest airline, we've got you covered.
-
The Auto Industry Outlook for 2024
The Kiplinger Letter Here's what to expect in the auto industry this year. If you’re in the market for a car it won’t be quite as daunting as it was during the pandemic and after.
