Asset Neutral

Published on July 24, 2023 by Premium

Net interest margins for many banks remain healthy, but have notably shrunk as deposit funding costs rose more quickly than anticipated. The first aggressive hike cycle in decades is revealing widely held assumptions on deposit behavior to be false. The surprising rate sensitivity of deposits appears to be due to both aggressive loan growth in the preceeding years, as well as a persistent reduction in system wide deposits via quantitative tightening. However, the largest banks […]

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