NYCB - KBE: CRE Worries Coming Home To Roost
2024-02-02 07:26:35 ET
Summary
- Lagged effects of higher interest rates are still filtering through the economy, potentially impacting bank earnings.
- For example, New York Community Bancorp recently reported dismal Q4 results due to provisions for CRE and multi-family loans.
- With a looming $1.2 trillion wall of mortgage maturities in the next 2 years, I believe regional bank earnings will still face headwinds.
Back in August, I penned a cautious follow-up article on the SPDR S&P Bank ETF ( KBE ), as rising interest rates were continuing to put pressure on banks' balance sheets. For a while, my thesis was correct as long-term interest rates climbed higher and the KBE ETF corrected to a low of ~$34 in late October (Figure 1).
Figure 1 - KBE has experienced a sharp rebound since late October (Seeking Alpha)