Summary
- The macroeconomic environment in the banking segment is deteriorating as the number of overdue loans is growing, forcing banks to increase reserves and negatively affects their profit.
- In addition to the loan portfolio, financial conditions in general have had a negative impact on banks' balance sheets. Debt instruments are depreciating and there is cash outflow from funds.
- Investment banking sector suffers more than others due to the drop in demand for these financial services. In the period of rising rates, any attraction of financing becomes much more.
- The Q4 reports were not homogeneous - most banks outstripped analysts' expectations, but their management gave a moderately negative outlook for the year to come. We do not expect the situation to improve in the short term.
- Now we do not see high potential for buying banks, but Citi seems to be the most attractive stock among them due to low price. We are ready to wait for better entry points.
For further details see:
Top 5 Banks Under Risk