Wells Fargo, Citigroup, Goldman Sachs Poised For Gains Amid Fed Rate Cuts - Morgan Stanley
Portfolio Pulse from Vandana Singh
Morgan Stanley anticipates significant gains for certain banks due to recent and potential future Federal Reserve rate cuts. Midcap banks like Prosperity Bancshares and Cadence Bank are expected to benefit from net interest margin expansions. Large-cap banks such as Citigroup, Goldman Sachs, and Bank of America are also poised for gains due to increased capital markets revenues and buybacks.
September 30, 2024 | 6:06 pm
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POSITIVE IMPACT
Bank of America is expected to benefit from increased capital markets revenues and buybacks in a lower-rate environment.
Bank of America's exposure to capital markets and potential for increased buybacks positions it well for gains in a lower-rate environment.
CONFIDENCE 90
IMPORTANCE 75
RELEVANCE 85
POSITIVE IMPACT
Citigroup is expected to benefit from a rebound in capital markets revenues and increased buybacks in a lower-rate environment.
Citigroup's exposure to capital markets and potential for increased buybacks positions it well for gains in a lower-rate environment.
CONFIDENCE 90
IMPORTANCE 75
RELEVANCE 85
POSITIVE IMPACT
Cadence Bank is projected to benefit from a rise in net interest margin as deposit costs decline, with minimal exposure to floating-rate loans.
Cadence Bank's minimal exposure to floating-rate loans positions it well for NIM growth as rates decrease.
CONFIDENCE 85
IMPORTANCE 65
RELEVANCE 75
POSITIVE IMPACT
Goldman Sachs is expected to see gains from increased capital markets revenues and buybacks in a lower-rate environment.
Goldman Sachs is well-positioned to benefit from a rebound in capital markets revenues and buybacks as rates decrease.
CONFIDENCE 90
IMPORTANCE 75
RELEVANCE 85
POSITIVE IMPACT
M&T Bank Corp is expected to see a slight boost in net interest margin from future rate cuts, contrary to market consensus.
M&T Bank is expected to benefit slightly from rate cuts, which is a positive deviation from the broader market view.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Prosperity Bancshares is expected to see significant net interest margin expansion through 2025 due to the repricing of fixed-rate loans and securities.
Prosperity Bancshares is highlighted as having one of the largest NIM expansions due to its fixed-rate assets, making it a strong investment amid rate cuts.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
Regions Financial is favored for its liability sensitivity and potential for commercial and industrial loan growth post-rate cuts.
Regions Financial's liability sensitivity and potential for loan growth make it a strong candidate for gains as rates decrease.
CONFIDENCE 85
IMPORTANCE 65
RELEVANCE 70
POSITIVE IMPACT
U.S. Bancorp is favored for its liability sensitivity and potential for commercial and industrial loan growth post-rate cuts.
U.S. Bancorp's liability sensitivity and potential for loan growth make it a strong candidate for gains as rates decrease.
CONFIDENCE 85
IMPORTANCE 65
RELEVANCE 70
POSITIVE IMPACT
Wells Fargo is highlighted for its strong excess capital levels and potential progress on lifting its asset cap, improving its risk-reward outlook.
Wells Fargo's strong capital levels and potential asset cap progress position it well for a favorable risk-reward outlook.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80