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Tuesday, November 15, 2016 8:04:52 AM
Is U.S. Financials/Bank Outperformance Vs. The Eurozone And Japan Sustainable?
* November 15, 2016
U.S. banks are very well capitalized, while euro area banks remain woefully undercapitalized. The dichotomy in credit quality/NPLs and NIMs is as wide as ever between the U.S. and Europe, which is reflected in diverging ROEs and valuations. The relative interest rate, inflation and wage growth backdrops also suggest that U.S. banks have the upper hand versus their Eurozone peers, which also have to contend with NIRP.
Similarly, U.S. banks continue to outshine Japanese banking outfits. While the relative credit quality and capital buffer backdrops are similar, the U.S. comes out on top given the diverging interest rate path and relative NIM advantage.
Moreover, President-elect Trump should not be as harsh on Wall Street as a Democratic President would let alone wanting to repeal the Dodd-Frank bill, and at the margin this is positive for U.S. banks/financials relative to both Eurozone and Japanese banks. In fact, Eurozone banks have to contend with the implementation of the new accounting standard IFRS 9, and according to the European Banking Authority (via Bloomberg) “European banks will need to increase provisions by 18 percent on average to meet new rules on accounting for potential loan losses”.
Bottom Line: Continue preferring U.S. financials at the expense of both their Eurozone and Japanese peers.
https://blog.bcaresearch.com/is-u-s-financialsbank-outperformance-vs-the-eurozone-and-japan-sustainable
• DiscoverGold
Click on "In reply to", for Authors past commentaries
* November 15, 2016
U.S. banks are very well capitalized, while euro area banks remain woefully undercapitalized. The dichotomy in credit quality/NPLs and NIMs is as wide as ever between the U.S. and Europe, which is reflected in diverging ROEs and valuations. The relative interest rate, inflation and wage growth backdrops also suggest that U.S. banks have the upper hand versus their Eurozone peers, which also have to contend with NIRP.
Similarly, U.S. banks continue to outshine Japanese banking outfits. While the relative credit quality and capital buffer backdrops are similar, the U.S. comes out on top given the diverging interest rate path and relative NIM advantage.
Moreover, President-elect Trump should not be as harsh on Wall Street as a Democratic President would let alone wanting to repeal the Dodd-Frank bill, and at the margin this is positive for U.S. banks/financials relative to both Eurozone and Japanese banks. In fact, Eurozone banks have to contend with the implementation of the new accounting standard IFRS 9, and according to the European Banking Authority (via Bloomberg) “European banks will need to increase provisions by 18 percent on average to meet new rules on accounting for potential loan losses”.
Bottom Line: Continue preferring U.S. financials at the expense of both their Eurozone and Japanese peers.
https://blog.bcaresearch.com/is-u-s-financialsbank-outperformance-vs-the-eurozone-and-japan-sustainable
• DiscoverGold
Click on "In reply to", for Authors past commentaries
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• DiscoverGold
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