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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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
-
Stocks Slip to Start Fed Week: Stock Market TodayWhile a rate cut is widely expected this week, uncertainty is building around the Fed's future plans for monetary policy.
-
December Fed Meeting: Live Updates and CommentaryThe December Fed meeting is one of the last key economic events of 2025, with Wall Street closely watching what Chair Powell & Co. will do about interest rates.
-
This Is Why Investors Shouldn't Romanticize BitcoinInvestors should treat bitcoin as the high-risk asset it is. A look at the data indicates a small portfolio allocation for most investors would be the safest.
-
The AI Boom Will Lift IT Spending Next YearThe Kiplinger Letter 2026 will be one of strongest years for the IT industry since the PC boom and early days of the Web in the mid-1990s.
-
Amid Mounting Uncertainty: Five Forecasts About AIThe Kiplinger Letter With the risk of overspending on AI data centers hotly debated, here are some forecasts about AI that we can make with some confidence.
-
Worried About an AI Bubble? Here’s What You Need to KnowThe Kiplinger Letter Though AI is a transformative technology, it’s worth paying attention to the rising economic and financial risks. Here’s some guidance to navigate AI’s future.
-
Will AI Videos Disrupt Social Media?The Kiplinger Letter With the introduction of OpenAI’s new AI social media app, Sora, the internet is about to be flooded with startling AI-generated videos.
-
What Services Are Open During the Government Shutdown?The Kiplinger Letter As the shutdown drags on, many basic federal services will increasingly be affected.
-
The Economy on a Knife's EdgeThe Letter GDP is growing, but employers have all but stopped hiring as they watch how the trade war plays out.
-
Banks Are Sounding the Alarm About StablecoinsThe Kiplinger Letter The banking industry says stablecoins could have a negative impact on lending.
-
Apple Readies for AI Upgrade with New iPhonesThe Kiplinger Letter The tech giant has stumbled when it comes to artificial intelligence, but a new batch of iPhones will help it make headway.
