There is no shortage of bearishness on banks, but pockets of Wall Street are willing to look past current storm clouds to where there might be opportunity in the sector.Bank balance sheets are sitting on hefty unrealized losses as their bondholdings have tumbled in value. Loan growth is slowing as would-be borrowers are loath to take out loans at higher rates.
So, yes, the sector doesn’t look great now. The SPDR S&P Bank ETF is off by 23% this year while the SPDR S&P Regional Banking ETF is down 33%. But the market, which is forward-looking, seems to be of the mind that banks are beyond saving. Newsletter Sign-up “While the proposed changes to capital requirements may lower the industry’s returns for a transitional period, over the longer run, banks must manage themselves to earn a reasonable return on their equity,” Kotowski wrote.