Zhitong Finance learned that Jefferies recently wrote in a report to clients that a rate cut by the Fed may have a greater negative impact on large banks, as they are more sensitive to the asset side, while regional banks are more neutral to short-term rates that sensitive to policies.

The bank analyst Ken Usdin obtained forward-looking guidance from Q2 2024 earnings, suggesting that most banks he studied anticipate annual growth in net interest income. Net interest income refers to the profit banks earn when interest income from loans and investments exceeds the interest paid on deposits and other borrowings.

Usdin said in a report last Tuesday: "Despite lower than expected loan growth, good deposit balances and pricing have prompted most banks to reiterate their NII guidance." Banks generally expect one to two rate cuts in 2024, lower than the market's expectation of about five.

Usdin pointed out that $Bank of America (BAC.US)$Please use your Futubull account to access the feature.$Wells Fargo & Co (WFC.US)$And$JPMorgan (JPM.US)$and other giant banks are generally sensitive to the asset of short-term US Treasury yields, while regional banks are sensitive to the asset of the dynamic curve for the repricing of fixed-rate assets in the medium term (5-year US Treasury yield) and long-term (10-year and 30-year US Treasury yields).

"The recent decline in U.S. Treasury bond yields - dragged down by a soft macroeconomic outlook - may herald a poor NII outlook for H2 2024 to 2025," the analyst wrote. "As a countermeasure, below-expected yields on income assets may be offset by faster downward deposit betas and recovering trading volume growth."

"Deposit beta index" measures the impact of changes in benchmark interest rates on bank deposit rates and measures the degree to which banks pass on market rate changes to customers. For example, if the market rate rises 1%, the deposit rate rises 0.6%, then the deposit beta coefficient is 0.6.

in the field of large regional banks,$Comerica (CMA.US)$And.$Citizens Financial (CFG.US)$ Group (CFG.US) NII is expected to decline quarter-on-quarter in the third quarter. Looking at the whole year, Fifth Third Bancorp (FITB.US), $Fifth Third Bancorp (FITB.US)$,$Huntington Bancshares (HBAN.US)$,$KeyCorp (KEY.US)$And.$Truist Financial (TFC.US)$Please note that both Fifth Third Bancorp (FITB.US) and Huntington Bancshares (HBAN.US) are expected to increase their NII quarter-on-quarter in the third quarter.

Comerica (CMA.US)$Fifth Third Bancorp (FITB.US)$Please use your Futubull account to access the feature.$Truist Financial (TFC.US)$N/A.$PNC Financial Services (PNC.US)$ $PNC Financial Services (PNC.US)$N/A.$Regions Financial (RF.US)$and $Huntington Bancshares (HBAN.US)$ it is expected that NII will decline by 10% in 2024, while $Comerica (CMA.US)$Asia Vets and New Energy Fund.$Citizens Financial (CFG.US)$In the second quarter, bank stocks performed well overall. For example, John Stern, the company's Senior Executive Vice President and Chief Financial Officer, said on the earnings conference call that the second quarter NII was boosted by "deposit growth, stable pricing, slower migration, repricing of fixed assets, improvement in loan portfolios, and actions to optimize the cash balance of other investment portfolios."

$Bank of New York Mellon (BK.US)$believes that this profitability indicator has slightly increased compared to the same period last year.$State Street (STT.US)$Overall, bank stocks performed well in the second quarter. For example, John Stern, the company's Senior Executive Vice President and Chief Financial Officer, said on the earnings conference call that the second quarter NII was boosted by "deposit growth, stable pricing, slower migration, repricing of fixed assets, improvement in loan portfolios, and actions to optimize the cash balance of other investment portfolios."

HSBC Bank analyst Saul Martinez believes that Q2 earnings for regional banks support the view that NII has reached a turning point and could see continuous growth in H2 2024. "Improving NII for the second half of the year is critical to achieving positive operating leverage and double-digit EPS growth in 2025 for many banks," he wrote in an August 4 report.

Similarly, Morgan Stanley analyst Manan Gosalia has greater confidence in medium-sized banks' NII turning points after reviewing Q2 performance. "It'll initially be driven by improving net interest margins as banks can quickly cut deposit costs. Accelerated loan growth across the industry in 2025 should then be a gradual catalyst.", said the analyst in a report.

In the field of large regional banks,$U.S. Bancorp (USB.US)$looking at the whole year, Fifth Third Bancorp (FITB.US), Huntington Bancshares (HBAN.US), and other giant banks are generally sensitive to the asset of short-term US Treasury yields, while regional banks are sensitive to the asset of the dynamic curve for the repricing of fixed-rate assets in the medium term (5-year US Treasury yield) and long-term (10-year and 30-year US Treasury yields).

Meanwhile, Bank of America's NII began to slide from the first quarter, with management saying it was due to "rising financing costs and the search for higher-yielding alternatives to deposit churn." Net revenue also declined sequentially for Wells Fargo, but CEO Charlie Scharf said that growth in non-interest income fully offset the decline.

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