Citizens Financial, US Bancorp, First Horizon and Synchrony Financial all paid higher rates on their customers’ deposits than a year earlier, they said Wednesday.
The results show pressure on banks from the Federal Reserve’s quantitative tightening that has pushed benchmark interest rates to their highest levels since the global financial crisis in 2008.
However, Wall Street operations were a bright spot. Bond underwriting and loan syndication led to a 63% increase in citizens’ capital market fees.
A resilient U.S. economy has encouraged corporate executives to raise capital through bond sales, driving up fees for investment banks that underwrite such deals.
Even at big banks like JPMorgan Chase, Citigroup and Bank of America, the investment banking business was profitable in the second quarter.
The KBW regional banking index hit a one-year high and was up nearly 2%, while the S&P 500 bank index rose 0.4%.
CRE in focus
Banks are facing intense scrutiny from investors due to potential weakness in their commercial real estate loan portfolios.
Problems with CRE loans at regional lender New York Community Bancorp and more recently First Foundation have focused attention on default risks.
The Federal Reserve’s stress test also showed that banks’ credit card loans and corporate credit portfolios could be strained.
Lenders hold a large share of non-investment grade corporate credit, which is three times more likely to default than investment grade, the Fed said.
On a brighter note, Washington Fed reported better-than-expected third-quarter earnings on Tuesday, nearly a month after it sold $2.8 billion of multi-family loans at a loss.
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