US regional banks rise as jumbo rate cut soothes deposit cost concerns

Banc of California

19/09/2024 12:44

** U.S. regional bank stocks rise in premarket trading after
the U.S. Federal Reserve cuts interest rates by 50 basis points
    ** KeyCorp  KEY.N , Regions Financial  RF.N , Fifth Third
Bancorp  FITB.O , Banc of California  BANC.N , and Comerica
 CMA.N  rise 2.4, 2.3%, 2.1%, 2.6% and 2.4%, respectively
    ** SPDR S&P Regional Banking ETF  KRE.P  up 2.7%
    ** Regional banks are expected to benefit more from rate
cuts compared to larger banks, as deposit costs reset lower and
loan growth set to accelerate
    ** Industry has been plagued with several major headwinds
including higher deposit costs, tepid loan growth, and elevated
concerns over credit quality since the Fed started its
aggressive monetary policy tightening
    ** Rate cut is the single most important catalyst to reverse
a list of headwinds into tailwinds for regional banks - J.P.
Morgan analyst Steven Alexopoulos
    ** Adds, Fed cut reduces uncertainty over borrowing costs
and the economy, while lower rates would also reduce fear over
banks with commercial real estate overhangs 
    ** KBW Regional Banking Index  .KRX , a key benchmark to
track investor sentiment toward the sector, up 4.4% YTD 

 (Reporting by Arasu Kannagi Basil in Bengaluru)
 ((ArasuKannagi.Basil@thomsonreuters.com;))