Fitch Ratings Says US Regional Banks' Funding, Growth Challenges To Persist In 2024
Portfolio Pulse from Benzinga Newsdesk
Fitch Ratings has projected that US regional banks will continue to face funding and growth challenges in 2024. The challenges are attributed to competitive deposit pricing and a potential economic slowdown, which could particularly affect smaller banks lacking scale.
November 15, 2023 | 8:24 pm
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NEGATIVE IMPACT
The SPDR S&P Regional Banking ETF (KRE), which tracks the performance of the regional banking sector, may face headwinds due to Fitch's negative outlook on funding and growth challenges for US regional banks in 2024.
Since KRE is an ETF that represents regional banks, the negative outlook from Fitch Ratings directly relates to the performance of its holdings. The forecasted challenges in funding and growth could lead to decreased investor confidence and potential underperformance of the ETF in the short term.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
The SPDR S&P 500 ETF Trust (SPY) may experience indirect effects from Fitch's outlook on US regional banks, as financial sector health is a component of broader market performance.
SPY is a broad market ETF, and while the health of the financial sector is a factor in its performance, the ETF is diversified across multiple sectors. Therefore, the impact of Fitch's outlook on regional banks may be muted for SPY compared to more focused banking ETFs like KRE.
CONFIDENCE 75
IMPORTANCE 40
RELEVANCE 50