Regional banks Zions, Northern Trust react to Barclays conference data
Following insights shared at the Barclays Global Financial Services Conference, Zions Bancorp. (ZION) experienced its most promising day since July, with a notable increase in net interest income. In contrast, Northern Trust (NTRS) reported an unexpected decline in net interest income. Yahoo Finance's Akiko Fujita and Julie Hyman provide an analysis of the regional banking sector and how it could have an effect on commercial real estate and future interest rates.
Video Transcript
AKIKO FUJITA: Some of the movers or the top movers of the day. And we're watching regional banks following updates from the Barclays Global Financial Services Conference. Zions Bancorp seeing its best day since July, as the company reported higher net interest income in July and August.
But it wasn't all good news. Northern Trust underselling pressure as it warned of a bigger than expected decline in net interest income. Julie, the backdrop to all of this is we're talking about these particular banks today, but it really is about a cloud that's been hanging over regional banks overall.
You look at where the SPDR S&P Regional Banking ETF has performed, it's down 25% year to date. And there's still a lot of questions, especially around commercial real estate. There was that big headline coming out of The Journal a few days ago about the doom loop that could potentially happen, the exposure that some of these regional banks have in that area, whether that could create a domino effect. Of course, all of this stemming from the concerns that happened earlier this year with SVB and the collapse there.
JULIE HYMAN: Yeah, the conversation seems to have shifted to some extent from deposits, which was really centered on what happened with SVB and the others and was there a big hit to deposits in the wake of that, and more focused on what is on the balance sheet, which also goes back to SVB, right? Are there big unrealized losses for some of these banks related to commercial real estate, related to other holdings that they have, related even to things like treasuries, which was something that was a vulnerability for that bank as well? And then sort of related to that, as we see interest rates rise, a lot of the commentary coming out of Barclays today in that conference had to do with net interest income, which, of course, is very closely linked to what is happening with interest rates.
AKIKO FUJITA: Yeah. So I mean, looking at where those two names perform today, I mean, this is just kind of one headline coming out of that. But regional banks are certainly going to be in focus moving forward as well. And of course, there's the regulation talk around that, too.
JULIE HYMAN: Right, definitely.
