Fed Stress Test 2024: Large Banks Face Greater Losses But Maintain Strong Capital Positions In Severe Recession Scenario (CORRECTED)
Portfolio Pulse from Piero Cingari
The Federal Reserve's 2024 stress test reveals that large banks face greater projected losses than last year but remain well-capitalized to endure a severe recession. Key banks like Ally Financial, Discover Financial Services, and Goldman Sachs are notably impacted by increased credit card losses, riskier corporate credit portfolios, and higher expenses. Despite these challenges, all 31 banks tested remain above their minimum capital requirements.
June 26, 2024 | 9:12 pm
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NEGATIVE IMPACT
Ally Financial faces substantial projected credit card losses due to increased balances and higher delinquency rates.
Ally Financial's exposure to increased credit card balances and higher delinquency rates leads to greater projected losses, negatively impacting its short-term stock price.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Barclays faces higher projected corporate loan losses due to downgraded corporate credit portfolios.
Barclays' downgraded corporate credit portfolios lead to higher projected corporate loan losses, negatively impacting its short-term stock price.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
Citizens Financial Group was among the worst performers in after-market trading following the stress test results.
Citizens Financial Group's poor performance in after-market trading indicates a negative short-term impact on its stock price following the stress test results.
CONFIDENCE 70
IMPORTANCE 40
RELEVANCE 50
NEGATIVE IMPACT
Citizen Inc. faces higher projected corporate loan losses due to riskier corporate credit portfolios.
Citizen Inc.'s riskier corporate credit portfolios result in higher projected corporate loan losses, negatively impacting its short-term stock price.
CONFIDENCE 75
IMPORTANCE 50
RELEVANCE 60
NEGATIVE IMPACT
Capital One Financial was among the worst performers in after-market trading following the stress test results.
Capital One Financial's poor performance in after-market trading indicates a negative short-term impact on its stock price following the stress test results.
CONFIDENCE 70
IMPORTANCE 40
RELEVANCE 50
NEGATIVE IMPACT
Discover Financial Services is impacted by both increased credit card losses and riskier corporate credit portfolios.
Discover Financial Services faces dual challenges of increased credit card losses and riskier corporate credit portfolios, leading to a negative short-term impact on its stock price.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
Goldman Sachs faces significant projected credit card losses and higher expenses, contributing to a larger capital decline.
Goldman Sachs' exposure to increased credit card losses and higher expenses results in a larger capital decline, negatively impacting its short-term stock price.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 85
NEUTRAL IMPACT
The Financial Select Sector SPDR Fund saw mixed performance among its components following the stress test results.
The mixed performance of XLF components following the stress test results suggests a neutral short-term impact on the ETF's price.
CONFIDENCE 60
IMPORTANCE 30
RELEVANCE 40
POSITIVE IMPACT
Truist Financial Corp was the top performer in after-market trading following the stress test results.
Truist Financial Corp's strong performance in after-market trading indicates a positive short-term impact on its stock price following the stress test results.
CONFIDENCE 70
IMPORTANCE 40
RELEVANCE 50