US bank stocks fall as investors turn jittery ahead of Q2 results

PacWest Bancorp

06/07/2023 16:40

July 6 (Reuters) - U.S. bank stocks fell and a key
regional index hit a near two-week low on Thursday amid
lingering worries about the health of the lenders in the
aftermath of the crisis in regional banks and ahead of
second-quarter results that start next week.
    The KBW Regional Banking Index  .KRX  fell 3% to its lowest
since June 23, adding to its year-to-date loss of 25.9%. The S&P
500 Banks Index  .SPXBK  slipped nearly 2.8%.
    "Net interest margin pressure is likely to be greater than
most expect as the 'honeymoon' period of the tightening cycle,
in which assets reprice higher while liabilities repricing lags,
has come to an end," said analysts at brokerage Raymond James.
    The banking sector's biggest crisis since 2008 has shaken
investor trust as small lenders found themselves on the wrong
side of the U.S. Federal Reserve's rate-hike cycle. 
    "The bright spots are few and far between from a fundamental
perspective for most banks in the current interest-rate
environment," Raymond James analysts said. 
    Regional lender PacWest Bancorp  PACW.O  dropped 8.1% after
KBW analysts cut the price target on the stock to $9 from $14.
Comerica  CMA.N , KeyCorp  KEY.N , U.S. Bancorp  USB.N  also
fell between 3.5% and 5.1%. 
    Bank stocks over the last month had regained some ground
after bearing the brunt of investor anxieties since March when
the collapse of three mid-sized lenders sparked a sector-wide
selloff.
    Last week, shares rose after the Federal Reserve's annual
health checks showed lenders could weather an economic slump. 
     Among individual movers, big banks JPMorgan Chase  JPM.N ,
Wells Fargo  WFC.N , Goldman Sachs Group  GS.N , Morgan Stanley
 MS.N , Citigroup  C.N , and Bank of America  BAC.N  dropped
between 1.7% and 3.2%.
    Banks are due to kick-off the second-quarter reporting
season late next week, with analysts and investors anxiously
looking for updates on deposit stability, net interest margin
expansion and executive comments on a looming economic slowdown.
  

 (Reporting by Manya Saini in Bengaluru; Editing by Arun Koyyur)
 ((Manya.Saini@thomsonreuters.com;))