Patricia Healy, CFA quoted in…
Gold Was Having a Meh Year Until the Attack on Israel. What’s Next for Bullion?
By Barron’s – OCT 13, 2023
Sizing Up the Banks
Oct. 11: Since March, Moody’s and S&P have downgraded numerous banks in response to the banking crisis and the weaknesses it exposed. In August, there was another round of rating actions. In early August, Moody’s took negative action on 27 banks, downgrading 10, placing six under review negative, and changing the outlook to negative on 11. Later in August, S&P downgraded five banks, with several others assigned negative outlooks. In mid-August, Fitch also released a comment on U.S. banks. We expect bank ratings will continue to be pressured, given the environment and the number of banks currently with negative outlooks or under review.
The American Bankers Association took issue with the rating-agency assessments in a strongly worded release on its website. The association noted that lending rates are rising, so margins shouldn’t be squeezed as much as assumed by the agencies, and that floating-rate loans and refinancing maturities have somewhat buffered net interest margin. Capital ratios are higher than required by regulators, and real estate portfolios are highly diversified. Many banks have indicated that the commercial real estate may be in more resilient subcomponents of office space, such as medical space, suburban office buildings, and newer class A properties.
Despite the rosier outlook from the bank trade association, not all is rosy for lower-rated banks with less diversified lending portfolios and large holdings of longer-dated investments, especially considering a potential economic slowdown and the refinancing needs of commercial real estate, as well as regulatory changes.
Read the full collection of outtakes at Barron’s with subscription: https://www.barrons.com/articles/gold-prices-popped-on-mideast-conflict-whats-next-for-the-metal-5c890b74
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