Bankers breathed a sigh of relief last week as the
"We expect their deposit costs to reprice downward more slowly than their loan yields, constraining net interest income, which is most banks' largest revenue source," Allen Tischler, senior vice president at Moody's Ratings, told American Banker's
The decision was approved in an 11-to-1 vote, with Federal Reserve Board Gov. Michelle Bowman as the lone dissenter. Bowman explained
"Despite my dissent at our recent meeting, I respect and appreciate that my colleagues preferred to begin the reduction in the federal funds rate with a larger initial reduction in the target range for the policy rate," Bowman said.
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Earnings were downcast across the board for
Comerica Bank in Dallas saw share prices drop in August following net interest income guidance falling by 14%, while Truist Financial's "higher finding costs and lower earning assets" pulled down net interest income by $77 million year over year.
Among international banks with a presence in the U.S., credit losses were a looming presence over earnings season.
BMO Financial Group in Montreal roughly doubled its provisions for credit losses compared to the same period last year, to CA$906 million.
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Read on for high-level insights on the top matters pressing investors and what they mean for the financial services industry.
Fed's long-awaited rate cut signals future drops
The Federal Reserve lowered the
The Federal Open Market Committee's cut was approved by an 11-to-1 vote, as lone dissenter Gov. Michelle Bowman felt 25 basis points would have been a more appropriate reduction. Future cuts are on the horizon before the FOMC concludes its meetings for the year, but the intensity and number of any decreases is still unknown.
"With the Fed pivoting, interest rates will be substantially lower over the next six to twelve months," Bill Adams, chief economist for Dallas-based Comerica Bank, said in an interview with American Banker's
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Bank stocks rally in wake of half-point rate cut by Fed
Following the Fed's first cut in roughly four years, bank stocks responded positively to the prospect of
"We expect their deposit costs to reprice downward more slowly than their loan yields, constraining net interest income, which is most banks' largest revenue source," Allen Tischler, senior vice president at Moody's Ratings, said in an email to American Banker's Jim Dobbs. "[Long term], reductions in deposit costs will catch up and strengthen net interest income."
Market barometers like the KBW Nasdaq Bank Index ended the day of the cut up less than half a percentage point, but rose by more than 1% shortly after the Fed's announcement.
"We made a good strong start to this," said Fed Chair Jerome Powell. "The U.S. economy is in good shape … We want to keep it there."
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Warren Buffett pumps the brakes on Bank of America stock sales
In the latest development of Berkshire Hathaway Cofounder and CEO Warren Buffett's quest to thin his position in Bank of America, the Wall Street giant slowed the pace of stock sales as the average share price hit $39.30 on Sept. 10 — the lowest since the campaign began.
Each prior three-day stint of trading generated an average of $870 million for the firm, while this most recent wave only brought in $229 million, according to regulatory filings.
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Incoming TD CEO faces big hurdles to success
The tail end of Bharat Masrani's decade at the helm of TD Bank Group has been plagued with
Recent hurdles include
"The anti-money laundering challenges we face took place on my watch as CEO and I take full responsibility," Masrani said on Sept. 19 in a prepared statement. "In the coming months, I will continue to advance and direct the critical remediation program required to meet our obligations and responsibilities and strengthen our risk and control foundation."
Masrani's successor after his retirement on April 10 is Raymond Chun, who joined TD's management training program in 1992 and is the current head of Canadian personal banking.
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What an Apple Card partnership could yield for banks
Following the
"When the Apple Card was launched in 2019, it was the most successful launch in history of a credit card — more users in the shortest period of time, ever," Richard Crone, chief executive and founder of Crone Consulting, an independent advisory firm for the payments industry, said in an interview with American Banker's
Research from a July 2023 Statista survey found that roughly 40% of Apple Card holders earned $100,000 or more, with a further 34% of consumers bringing in between $50,000 and $99,999 in income.
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