Kroll Bond Rating Agency (KBRA) publishes the latest edition of The Bank Treasury Newsletter by Ethan Heisler, founder and editor-in-chief of The Bank Treasury Newsletter and Senior Director for KBRA.

In this month’s edition, Bank Treasurers Maintain Balancing Act, we report on how bank treasurers are starting to look toward the end of the Fed’s current rate hike cycle, doubly challenged by a flat to inverted yield curve and historically low interest rates. We found that bank treasurers are content to maintain the balance sheet asset sensitivity that helped create a period of profitability for bank shareholders. Data suggests that deposit repricing beta already reached peak levels and were falling in Q4 2018, and that upward pressure on deposit rates may be nearing a ceiling.

In addition, banks do not expect to provide estimates on the potential impact of the FASB’s upcoming current expected credit loss (CECL) regulations until the second or third quarter of this year, according to bank executives. We learned that banks are more concerned about CECL’s pro-cyclical impact on lending than the transition or anticipated hit to capital due to larger reserve requirements.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.