Second-quarter results reveal that major banks are already benefiting from the Federal Reserve’s interest rate hikes.
Big U.S. banks have begun to reap the rewards of higher interest rates as the Federal Reserve combats inflation with a series of hikes, as evidenced by second-quarter results earlier this month. Thanks to higher rates and good loan growth, banks posted a 9% surge in second-quarter net interest income on a quarterly basis. This is a "key driver" for revenue that should continue into the third quarter, JPMorgan banking analysts led by Vivek Juneja said Wednesday in a note.
"Bank stocks remain attractively valued, but the key concern remains whether there will be a hard or soft landing and what impact Fed tightening will have," Juneja said. "We expect markets and bank stocks to remain choppy until there are clearer signs of the impact of persistently high inflation.
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