Kroll Bond Rating Agency (KBRA) announces the release of this month’s edition of Bank Talk: The After-Show, by Ethan Heisler, founder and editor-in-chief of The Bank Treasury Newsletter and Senior Director for KBRA.

In this month’s edition, titled “Bank NIM Rides the Rates,” Ethan and Van look at 35 years of data for the 1-year constant maturity rate (CMR), the spread between 3-month Bills and 10-Year CMR, and NIMs. Ethan notes that NIM is mostly tied to the direction of interest rates because bank balance sheets are positioned to be asset-sensitive, widening when rates increase, and narrowing when they decrease. Acknowledging, as Van points out, that the shape of the yield curve also matters, Ethan argues that there is more risk for banks today, when interest rates fall, than increase. He advocates that the industry is not taking enough interest rate risk, and that long-term profitability could suffer if rates head lower and changes to balance sheet positioning are not made.

Related Publications: (available at www.kbra.com)

  • Bank Talk - The After Show: Bank NIM Rides and Rates
  • Bank Talk Podcast - January 2019

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.