Deep Dive: 20 bank stocks expected to benefit the most from rising interest rates as the Federal Reserve fights inflation

by | Sep 14, 2022 | Stock Market

When companies report financial results, analysts tend to make comparisons to the year-earlier quarter. But there are times when sequential improvements can be telling. This is one of those times for small and mid-sized banks. Below is a screen that shows which U.S. banks are expected to show the greatest improvement in interest-rate spreads over the next four quarters.

‘Spread-lenders’ For an example of sequential improvement during the second quarter, Comerica Inc.
CMA
of Dallas reported a 23% increase in net interest income from the first quarter. A bank’s net interest income is its interest income, less the costs for deposits and borrowings. This is the core earnings driver for most banks, leaving aside those that focus more on capital-markets activity, such as JPMorgan Chase & Co.
JPM,
Bank of America Corp.
BAC
and Citigroup Inc.
C.
According to Christopher McGratty, head of U.S. banking research at Keefe, Bruyette & Woods, capital-markets revenues at the largest U.S. banks are now “clearly in a recession.” During the second quarter, Comerica’s net interest margin (NIM) — the spread between the average rate …

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