Kroll Bond Rating Agency (KBRA) releases this month’s edition of the newsletter, Bank Treasurers Leap Into the New Year, which reviews some of the key takeaways from the Q4 2019 earnings conference calls and summarizes the reasons why bank treasurers believe that 2020 could be a more challenging year for them to generate positive operating leverage compared to 2019.
Bank management appeared universally confident that the current benign economic environment would not change any time soon, but also view the current state of affairs to lead to further pressure on the industry’s net interest margins and headwinds for growing net interest income. They discussed competition in the deposit market and how a more stable rate environment would lead to it becoming the primary driver of deposit prices over rates in 2020.
The newsletter also highlights the Fed’s balance sheet growth, which appears tied to trends in the volume of deposits. Analysts also heard a universal message from the major global banks and regionals that neither the Day 1 nor Day 2 effect of the new Current Expected Credit Loss (CECL) will lead to any noticeable impact on their balance sheets or reported earnings, with the sole caveat that the current economic environment stays in place.
To view the report, click here.
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KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200127005516/en/
Contacts:
Ethan M. Heisler, CFA, Senior Director
(516) 359-0975
eheisler@kbra.com
