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

PacWest Bancorp

06/07/2023 19:29

(Updates shares throughout, adds analyst comment in paragraph
12 and graphic on KRX performance)
    By Manya Saini
       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 , which hit its lowest
since June 23, was last down 2%, adding to its year-to-date loss
of 25.1%. The S&P 500 Banks Index  .SPXBK  slipped 2%.
    "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 had 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 6% after
KBW analysts cut their price target on the stock, citing the
loss on the recently announced loan sales and a more
conservative net interest income outlook. 
    Comerica  CMA.N , KeyCorp  KEY.N , U.S. Bancorp  USB.N  also
fell between 2.3% and 2.9%. 
    

    Bank stocks over the last month had regained some ground
after bearing the brunt of investor anxieties since March.
    Last week, shares rose after the Fed'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 1.5% and 3.1%.
    "Despite recent deposit stability, borrowings have remained
fairly elevated throughout 2Q23 and only recently begun to
moderate," said analysts at KBW, adding that as the banking
industry continues to distance itself from the stress in March
and April, the brokerage expects borrowing levels to move lower.
    Banks are due to kick-off the second-quarter reporting
season late next week, with all eyes on updates around deposit
stability and macroeconomic headwinds.   

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Regional bank stocks continue to feel the weight of sector's
crisis    https://tmsnrt.rs/3psFpKw
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 (Reporting by Manya Saini in Bengaluru; Editing by Arun Koyyur
and Maju Samuel)
 ((Manya.Saini@thomsonreuters.com;))