Whats seems to be happening in bank stocks last couple days...Bmo seems to have fallen quite a bit....Is their something ti be concerned about
thx
NYCB (comments posted below ) in the US has experienced loan issues and cut its dividend, raising concerns about the possibilty of another regional banking crisis like last year in the US. All indications are that NYCB is an isolated issue, as it grew enough to require more capital requirements. But investors are always skeptical, and lots of concerns remain around real estate in general.
NYCB is a regional bank, trading at 0.5x Price/Book. NYCB faces higher loan losses in 4Q after clearing the $100 billion-asset mark, indicating uncertainty around credit quality of the loan book. Larger banks require higher capital adequacy ratios, and this is why the company needed to cut its dividend. A reserve build spurred the 4Q earnings loss. Reserves stand at 1.17% of loans, closer to peers. Elevated losses reflected a multifamily charge-off and office weakness. NYCB expects liquidity and a capital build in 2024, with CET1 ratio expected at 10% by year-end vs. 4Q's 9.2% to position the balance sheet closer to larger peers. The instability in the capital base and loan book led to the dividend cut to 5 cents a quarter and includes 2024 optimization measures, with loans expected down 3-5%. Guidance implies net interest income could fall 14%, worse than consensus. Overall, we would stay away from financial institutions with a weak capital base and questionable loan book quality. In a loss scenario, as we saw last year in the regional banking crisis, equity can at times be eroded quickly.