The Federal Reserve this week began what’s billed as a consistent upward march in its benchmark interest rate, from near zero—a campaign that could bring the target rate to just under 2.0% by year-end. Conventional wisdom is that the higher rates will plump lenders’ revenue a lot.
But some banks stand to fare better than others. Namely, the smaller ones that are U.S.-centered, according to a Bank of America report. It lists six regional banks, whose operations are almost completely domestic, and one larger one, Wells Fargo, which does have an international business. (Wells’ inclusion on BoA’s roster is based on an expected turnaround.)
Apart from Wells, the BofA list includes Citizens, East West, M&T, Signature, Synovus and SVB Financial. Their stocks are in the green with the exception of Signature and SVB. Not that the other four are scorching the track, with the biggest 2022 advance being Synovus’ 0.8%.
“Rate-sensitive, domestically focused banks are likely best positioned to outperform given investor caution on globally interconnected institutions,” BofA researchers wrote.
Many large banks’ stocks are down this…
