Along with major banks, regional banks are also announcing their quarterly financial results. The bank has forecast that its net interest income (NII) will decrease. Rising interest rates have stifled lending activity this year, forcing regional banks to focus on retaining customers, pushing up deposit costs as a result.
Additionally, Comerica (CMA) is facing an expiration date in 2025 for its contract with the U.S. Treasury Department for its Direct Express card.
David Chiaverini, managing director of equity research at Wedbush Securities, joins Market Domination to provide insight on Comerica’s outlook and the broader regional banking environment.
Chiaverini outlined what future growth will look like: “We expect net interest income (NII) and net interest margin to stabilize in the second and third quarters. The primary driver of NII is, as you point out, loan growth. Unfortunately, the message coming out of regional banks this week is that loan growth is sluggish and is likely to remain sluggish for the foreseeable future.”
“What will accelerate loan growth and what will be the catalyst is lower interest rates. Right now, loan demand is low because many borrowers are viewing high costs as a headwind to taking out additional loans. So lower interest rates could be a very good catalyst for loan growth.”
Yahoo Finance also spoke with Tim Spence, CEO and president of Fifth Third Bancorp (FITB), on the same day.
For more expert insights and the latest market trends, click here to watch this entire episode of Market Domination.
This post Nicholas Jacobino
