US bank results under scrutiny after March panic

Barely a month after the close failures of three American banks that shook the world of finance, the major establishments in the sector will have to demonstrate in the coming days their solidity and how they intend to cope with a possible recession.

The situation has calmed down since early March, when the American authorities intervened urgently to take control of Silicon Valley Bank (SVB) and Signature Bank, destabilized in the face of massive customer withdrawals a few days after the liquidation of Silvergate. , a small regional bank that has become one of the favorite destinations in the cryptocurrency community.

These banks were carried away for specific reasons but also for factors weighing on the entire sector, starting with the sharp rise in interest rates.

"

", notes Stuart Plesser of the S&P Global agency, also mentioning a probable stricter regulation of the sector.

“

,” he adds.

JPMorgan Chase, Citigroup and Wells Fargo as well as the slightly smaller bank PNC will kick off the publication of the results of the banks on Friday.

Bank of America and Goldman Sachs will follow on Tuesday, ahead of the broadcast over the next two weeks from several mid-sized institutions.

The figures on April 24 from First Republic, supported in mid-March by the authorities and other establishments, will be particularly watched.

Banks “

,” suggests Clifford Rossi, a former risk manager at Citigroup and professor at the University of Maryland.

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Towards a reduction in the loans granted?

The analysts interviewed agree that the situation is different depending on the size of the establishments.

Both SVB and Signature Bank suffered from their particularly high exposure to the tech or cryptocurrency sectors, as well as from the rise in interest rates which mechanically reduced the value of some of their assets such as Treasury bills. .

Alarmed by signs of weakness, some customers rushed to withdraw their money, precipitating their bankruptcy.

They have also encouraged customers of similar establishments to move their savings to big names considered too big to fail.

"

" to other businesses and individuals, notes Stuart Plesser.

According to a survey by the National Federation of Independent Businesses (NFIB) published on Tuesday, 9% of respondents reported having recently had more difficulty obtaining a new loan.

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Another quarter in slow motion?

The big banks, for their part, have certainly recovered some of the deposits of the smallest establishments, but they have also faced withdrawals from customers having to pay their taxes or seeking to invest their money in financial products that are more profitable than a simple account. fluent.

As inflation and rising interest rates weigh on household and business budgets, banks are likely to be more selective in the loans they grant on the one hand and to face lower demand on the other. for real estate or car loans.

The commercial real estate sector should be subject to particular attention.

"

," said Patrick O'Hare, analyst for Briefing.

They should increase the sums set aside to deal with possible outstanding payments from their customers and the slowing of the economy, or even a possible recession.

But probably not as much as during the 2007-2009 financial crisis or at the start of the pandemic, analysts say.

Investment bankers, for their part, probably experienced another slow quarter, with companies reluctant to commit to takeovers or IPOs given the economic context.

The activity of traders should for its part be down compared to the same period last year, which was particularly volatile, but remain at historically high levels.