Woes Continue for Banking Sector: The Kiplinger Letter
Regional bank stocks were hammered recently after news of New York Community Bank’s big fourth-quarter loss.
![A windowed wall with the word "bank" on it.](https://cdn.mos.cms.futurecdn.net/J7WAtpqnSKUededrwbWgTT-415-80.jpg)
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.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
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
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Rodrigo Sermeño covers the financial services, housing, small business, and cryptocurrency industries for The Kiplinger Letter. Before joining Kiplinger in 2014, he worked for several think tanks and non-profit organizations in Washington, D.C., including the New America Foundation, the Streit Council, and the Arca Foundation. Rodrigo graduated from George Mason University with a bachelor's degree in international affairs. He also holds a master's in public policy from George Mason University's Schar School of Policy and Government.
-
Visa Is the Worst Dow Stock Wednesday. Here's Why
Visa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
By Joey Solitro Published
-
Another Analyst Moves to the Sidelines on Tesla Stock After Earnings
Tesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
By Joey Solitro Published
-
Car Prices Are Finally Coming Down
The Kiplinger Letter For the first time in years, it may be possible to snag a good deal on a new car.
By David Payne Published
-
Rising Cyber Threat of AI: The Kiplinger Letter
The Kiplinger Letter Security experts warn that generative AI brings new risks with no clear defenses. With AI's rapid adoption, businesses are vulnerable.
By John Miley Published
-
Congress Spends Big on Closing the Digital Divide
The Kiplinger Letter A massive spending program is designed to bring high-speed internet to rural and remote locations.
By John Miley Published
-
Kiplinger Special: The Long-Term Future of the U.S. Economy
The Kiplinger Letter Kiplinger's report into what it will take the U.S. to maintain a healthy economic growth rate.
By David Payne Published
-
QCDs Are a Tax-Smart Way for Retirees To Donate to Charity
The Tax Letter With QCDs, retirees can save on taxes by making donations from their IRAs directly to charity. Here's what you need to know about qualified charitable distributions.
By Joy Taylor Published
-
The Fight Against Cancer Enters a New Phase
The Kiplinger Letter Breakthrough treatments hold promise for patients and investors.
By Matthew Housiaux Published
-
How to Beat Soaring Home and Auto Insurance Premiums
The Kiplinger Letter What’s behind the insurance price hikes, and what to do about them?
By Rodrigo Sermeño Published
-
How to Navigate an Extra-Busy Summer Travel Season
The Kiplinger Letter Tips for beating the exceptional crowds expected this year and keeping your vacation budget manageable.
By Sean Lengell Published