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As Rate Rise Looms, Watch Bank Portfolio Mix 

May 22, 2015

Mark Melin

As Credit Suisse Group AG (ADR) eyes what they predict will be a September Fed interest rate increase, they consider bank portfolio positioning in anticipation of an event that typically doesn’t portend well for stocks.

Credit Suisse: Large bank portfolios saw 6 basis point decline, while mid-cap

Average yields generated from large-cap bank securities dropped again in the first quarter of 2015, down 6 basis points, while mid-cap bank portfolios saw a slightly better decline, only down 2 basis points on a quarter by quarter basis.

As deposit growth and outstripped loan growth and liquidity coverage ratios, which mandate the cash on hand relative to bank lending, have been implemented under Basel III regulations, securities as a percentage of average bank earnings has steadily increased to near 22 percent. The report, written by New York bank analysts Susan Roth Katzke, Jill Shea and Adam Krasner, notes that since the Basel III regulations have been mostly implemented, deposit growth is a key driver of securities investing increasing.

Credit Suisse: Material shift in asset allocation towards held-to-maturity securities

Read more: ValueWalk

 
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