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BANK COMPENDIUM INSIGHTS: FOURTH-QUARTER 2022 BANK EARNINGS IN REVIEW
Bank Loan Quality and Loss Absorption Capacity Better Today Than in Early 2000s
In case you missed it, KBRA Financial Institutions Group analysts Leah Hallfors, Senior Director, John Rempe, Director, and Brian Ropp, Managing Director, discuss KBRA’s latest views of the U.S. banking industry, as well as the key takeaways of 4Q22 financial results. This edition also features a study conducted on various loan mix and quality indicators, as well as the loss absorption capacity from structural earnings, of banks as of 3Q22 relative to the period surrounding the early 2000s recession.
The eleventh episode of Bank Compendium Insights highlights:1. Loan mix and quality in 3Q22 compared to the early 2000s
2. Loss absorption capacity via structural earnings and secondary buffers
3. Deposit betas and NIM trends
4. Environmental, Social, and Governance regulatory update
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In this episode, Joan Feldbaum-Vidra, head of Sovereigns Ratings, discusses expectations for sovereign credit quality. The improved outlook for growth is balanced against still weak growth expectations, swollen government balance sheets, tight financial conditions, political risks, and enduring high prices for food, while the expiration of the G20’s Debt Service Suspension Initiative in the next few years will require difficult fiscal adjustments. Government balance sheets are also less flexible to manage future shocks.
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THIRD-QUARTER 2022 BANK EARNINGS IN REVIEW
Stable Outlook in 2023 for U.S. Banking Industry Despite Monetary HeadwindsKBRA Financial Institutions Group analysts Leah Hallfors, Senior Director, John Rempe, Director, and Brian Ropp, Managing Director, discuss KBRA’s latest views of the U.S. banking industry and 2023 sector outlook, as well as the key takeaways of 3Q22 financial results. This edition also highlights the resilience of the KBRA-rated bank universe amid the intensified tightening cycle.
The 10th episode of Bank Compendium Insights examines:
1. Earnings performance amid rising rates and competing tailwinds and headwinds
2. Accelerating deposit betas and the strength of deposit franchises
3. The lagged effect on loan portfolio quality
4. Banks generally better positioned to withstand stressed conditions versus previous cycles -
In this episode we discuss KBRA's recent rating action on the United Kingdom (UK) and the management of the UK ratings since KBRA first assigned its rating in 2018. In the podcast, KBRA’s Ken Egan, lead analyst on the UK credit rating, walks us through the credit rating history of the UK, highlights the main factors identified for the downgrade in its recent credit report, and provides an update on the current macro situation in the country.
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SECOND-QUARTER 2022 BANK EARNINGS IN REVIEW
Navigating the Sharpest Fed Tightening Cycle Since Volcker
KBRA Financial Institutions Group analysts John Rempe, Director, and Leah Hallfors, Senior Director, cover the key takeaways of 2Q22 financial results, share insights on how the industry is navigating the sharp increase in interest rates so far in 2022, the outlook for bottom-line returns, and examine key topics and trends that are top-of-mind, in view of the uncertain economic environment. The ninth episode of Bank Compendium Insights highlights:
1. Earnings Performance: Bank ROA and NIM results and trends in a higher interest rate environment
2. Capital: Core capital trends and reduced capital cushions
3. Asset Quality: A position of strength despite recession risks
4. Developments in the deposit space
5. ESG Bulletin Spotlight – Univest Financial Corporation and industry developments in ESG -
In this episode we discuss recent U.S. data prints, growth and policy developments in China, and global macro dynamics, as well as their impact on sovereign credit. In the podcast, KBRA’s Joan Feldbaum-Vidra, Senior Managing Director and Head of Sovereigns, paints a gloomy picture for global sovereigns, but also highlights strides toward greater energy resilience in Europe.
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In this episode, Andrew Giudici, Senior Managing Director, Kathryn Bai, Associate Director, and Justin Huynh, Associate Director discuss JFK NTO, LLC’s $6.63 billion financing for phase A of the Terminal One redevelopment project at New York’s John F. Kennedy International Airport. The discussion explores some of the key credit considerations of this landmark public-private partnership transaction including traffic forecasts and construction.
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KBRA releases a new podcast episode discussing the following topics:
Tighter financial conditions in emerging markets are not containing inflation.China exposure and food security and prices remain key credit risks for emerging market economies, offset somewhat by commodity price gains for producing economiesManaging these challenges by delivering faster-paced structural reform or seizing near-shoring opportunities can mitigate emerging market credit risk.
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FIRST-QUARTER 2022 BANK EARNINGS IN REVIEW
KBRA Financial Institutions Group analysts John Rempe, Director, and Leah Hallfors, Senior Director, cover the key takeaways of 1Q22 financial results, dissect interest rate sensitivity of KBRA’s coverage and also review the potential impact of inflationary pressures on auto lending. The eighth episode of Bank Compendium Insights highlights:
1. Earnings Performance: Bank ROA and NIM results and trends in a higher interest rate environment
2. Capital: Core capital trends and impact of AOCI on TCE ratios
3. Consumer: Drill down on auto lending
4. ESG Bulletin Spotlight – PacWest Bancorp and Industry developments in ESG -
KBRA releases a new podcast episode discussing the Ukrainian refugee crisis and the financial support being organized as a means of assistance. The discussion explores topics such as potential costs, allocation of funds between countries hosting refugees and displaced persons within Ukraine, facilities already announced, as well as the macro and political backdrop in Europe in face of this new stress.
“The theme of refugee absorption will likely take center stage for European politics in the coming weeks and months as the pressure mounts,” according to Ken Egan, Director in KBRA’s Sovereigns Group. -
The latest podcast episode brings together KBRA’s Joan Feldbaum-Vidra, Managing Director and Head of Sovereigns, and Ethan Heisler, Editor of The Bank Treasury Newsletter, who published an NIRP report in September 2020. Citing key takeaways from the report, they note that NIRP has not fully delivered on its promises and, as a policy tool, showed shortcomings given that negative rates cannot fall below the storage cost of money.
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Fourth-Quarter 2021 Bank Earnings In Review: A Year and a Pandemic in Review
KBRA Financial Institutions Group analysts Brian Ropp, Senior Director, and John Rempe, Director, cover the key takeaways of 4Q21 financial results and dissect the impact that nonrecurring revenue sources had on bank earnings and our 2022 outlook. The seventh episode of Bank Compendium Insights highlights:
1. Revenue: Mortgage banking and PPP income’s impact on bank earnings
2. ROA: 2020 and 2021 loan provision build/releases impact on ROA
3. 2022 outlook for bank industry -
In this episode, KBRA Managing Director and Head of Sovereigns Joan Feldbaum-Vidra reviews the main takeaways from her recent report, Sovereigns 2022 Outlook: New Challenges Ahead, and expands on the role of inflation expectations as adding complexity to the new challenges ahead.
“In some countries, despite a long period of relatively tamed inflation, the anchoring of expectations is at a higher level,” Feldbaum-Vidra said. “In this next period, which involves new challenges, this can create complexities and amplify risks.” -
Third-Quarter 2021 Bank Earnings In Review: Three Points in Bank Credit
KBRA Financial Institutions Group analysts Brian Ropp, Senior Director, and John Rempe, Director, break down three key points in bank credit and why you should expect higher quality bank earnings quality going forward---as noncore items are running their course. The sixth episode of Bank Compendium Insights, highlights:1. Liquidity and net interest margin, and our expectations going forward.
2. Strong credit quality and slower loan growth have driven Loan Loss Reserve Releases, however we believe provision recaptures are moderating.
3. With noncore earnings running their course, we expect higher quality of earnings going forward.
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In this episode, Gordon Kerr, Head of European Research, and Karim Nassif, Director, Project Finance & Infrastructure Ratings, discuss the increasing role of market risk in renewable project finance. Increasing market risk amid a rapidly growing environment creates challenges for project finance transactions. Karim and Gordon discuss these challenges and the way transactions have adapted to the changing environment.
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In this episode, Michael Alter, Associate Director of Power, Energy, and Renewable Finance, and Andrew Giudici, Global Head of Corporate, Project, and Infrastructure Finance, discuss what energy storage is, the types of use cases it can target, and how KBRA assesses the technology in terms of project credit quality and environmental, social, and governance (ESG) risks.
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In this episode, Joan Feldbaum-Vidra, Head of Sovereigns at KBRA, highlights the following topics:
• China growth slowdown and monetary policy normalization by global central banks are key to watch.
• Food price inflation is a particularly sensitive area for emerging markets (EM).
• Real effective exchange rate weakness helps insulate EMs from shock.
• Reality check: Many EMs have until recently upgraded their growth projections and have been proactive in the face of tightening credit conditions.
“Inflationary impulses don’t appear to be putting EMs in the danger zones like in the past, even considering the inflation we are experiencing in this stage of the pandemic environment.” – Joan Feldbaum-Vidra -
This podcast episode discussing China’s growth performance and prospects, as well as the reasons behind some of its bold policy moves. In this episode, KBRA Managing Director and Head of Sovereigns Joan Feldbaum-Vidra explains why China’s Q3-Q4 and longer-term growth may be on weaker footing, why small and medium-sized enterprises (SMEs) in China are struggling, and how tightening of credit elsewhere, coupled with regulatory U-turns, may dampen investment.
“Major regulatory action aims to change the way business is being conducted in China," — Joan Feldbaum-Vidra, Managing Director and Head of Sovereign Ratings, KBRA
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Second-Quarter 2021 Bank Earnings in Review: Record Earnings–There Is More to the Story Than Meets the Headline.
KBRA Financial Institutions Group analysts Brian Ropp, Senior Director, and John Rempe, Director, break down five key factors that have contributed to the banking industry’s record profits in 1H21 that may be transitory in nature and not necessarily reflective of core bank earnings. The fifth episode of Bank Compendium Insights, highlights:
1) Loan loss reserve releases impact on earnings
2) Excess liquidity’s impact on net interest margin and how Paycheck Protection Program (PPP) fees has partially masked declines in net interest income
3) Weak loan growth hampering industry’s ability to replace PPP loan runoff
4) Mortgage banking income impact on noninterest income
5) Operating cost reductions that helped offset declining revenues may be slowing -
Head of Sovereigns, Joan Feldbaum-Vidra, and European Sovereign analyst Ken Egan update us on major central monetary policy and implications for sovereign credit.
• The Fed, ECB, BOJ and BOE all engaged in aggressive balance sheet expansion to support their economies during the pandemic.
• Monetary policy normalization not likely to come very soon, for most.
• The BOE has already slowed its pace of asset purchases and is likely to be the first to move on rates.
• Early monetary policy normalization would be troubling for small economies, including in the emerging markets space, especially considering lagged vaccine rollouts and recoveries. - Visa fler