Whalen Global Advisors Publishes 2023 Banking Industry Outlook

Rising interest rates pushed down the tangible capital of the banking industry to negative $1.9 trillion in Q3 2022

The IRA Bank Book

Whalen Global Advisors LLC has released the latest edition of The IRA Bank Book, the quarterly review and outlook for the U.S. banking industry. 

The highlights of the new edition of The IRA Bank Book include:

  • Rising interest rates and falling prices for bonds and loans caused accumulated other comprehensive income (AOCI) for the U.S. banking industry to increase almost 40% in Q3 2022 to a record negative $347 billion or roughly 25% of total tangible capital.
  • Year-end the AOCI deficit for all federally insured depositories could hit negative $500 billion depending upon the rate of interest rate increases by the FOMC, asset sales and the movement of available-for-sale assets into portfolio (HTM).
  • Rapidly rising interest rates in Q3 2022 pushed down the tangible capital for the U.S. banking industry to negative $1.9 trillion under a moderate stress scenario, according to published estimates from WGA LLC.

"The good news for the financial industry is that asset returns are rising fast due to higher interest rates," notes WGA Chairman Christopher Whalen. "The big area of danger for the banking industry in 2023 continues to be market risk. Due to the Fed, market risk is effectively becoming outsized credit risk that threatens the solvency of banks and nonbanks alike."

Copies of The IRA Bank Book for Q4 2022 are available to subscribers to the Premium Service of The Institutional Risk Analyst. Standalone copies of the report are also available for purchase in our online store

About Whalen Global Advisors LLC

Whalen Global Advisors LLC (WGA) is a New York-based consulting, risk analytics and publishing company that focuses on financial institutions and global markets. WGA publishes The Institutional Risk Analyst (ISSN 2692-1812), including commentary on the capital markets, industry reports and company profiles. For additional information, please contact us at info@rcwhalen.com.

Source: Whalen Global Advisors LLC