XLU - KRE: Regional Banks Face Structural And Cyclical Headwinds

Regional banks in the United States (KRE) are facing both structural and cyclical economic headwinds, including lower interest rates, faltering economic growth, and flatter yield curves. These structural and cyclical economic factors are translating to lower net interest income "NII" growth, weakening loan growth, and falling net interest margins "NIMs."

The combination of these factors already has unfolded similarly in both Japan and Europe, several decades ahead of the United States in regard to the deterioration in demographics. The result in both Japan and Europe has been a decimation of the banking sector,