Whalen Global Advisors has released The IRA Bank Book for Q2 2023, including a review of the latest financial results for the banking industry and our outlook for the rest of 2023. Copies of the IRA Bank Book for Q2 2023 are available to subscribers to the Premium Service of The Institutional Risk Analyst.
WGA Chairman Christopher Whalen commented on the industry outlook: “Since the failure of Silicon Valley Bank in March, the cost of funds for most US banks has risen two or even three-fold. Many banks face an unprecedented interest rate environment that could push many institutions into loss this quarter."
Highlights from the latest edition of The IRA Bank Book include:
A $19 billion, one-time uptick in noninterest income saved the US banking industry from a down quarter in Q1 2023. Net interest income and broad banking industry earnings may decline again in Q2 due to unprecedented deposit interest rate re-pricing.
As Treasury rebuilds cash position via $700 billion refunding, bank deposits will come under pressure from 5.5% yield on T-bills. Every new T-bill sold to private investors results in a bank deposit disappearing, part of the deflationary mechanics of QT.
“With industry gross asset returns around 5-6% in Q2 2023 and funding costs approaching these levels, many banks may report GAAP losses in Q2 because of severe asset/liability mismatch,” notes Whalen. “The cost of credit to the economy will also rise as banks aggressively reprice assets.”
Source: FDIC
Copies of The IRA Bank Book for Q2 2023 are available to subscribers to the Premium Service of The Institutional Risk Analyst. Standalone copies of the report are also available for purchase in our online store. Media wishing to receive a courtesy copy of the report please email: info@theinstitutionalriskanalyst.com
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