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NYCB on Wednesday boosted its provisions for credit losses by
345%, part of which was allocated to its commercial real estate
(CRE) portfolio, re-igniting worries over defaults as high
interest rates and remote work dampen office demand.
NYCB's shares have nearly halved in value over the last two
sessions, while the KBW Regional Banking Index, a key gauge of
the banking industry, has plunged nearly 8% over the period.
The stock reaction has hit investor confidence to re-engage in
bank stocks, BofA analysts said.
"It could potentially cause investors to take a wait-and-watch
approach until additional visibility emerges on macro, Fed
policy and earnings per share outlooks."
Meanwhile, shares of Japan's Aozora Bank slumped to a three-year
low in Tokyo after it took a huge loan-loss provision against
U.S. office loans.
The disclosure from Aozora Bank on Thursday "lit a match" to
underlying CRE fears but the reaction in U.S. bank stocks was
overdone, Citi analyst Keith Horowitz said.
"We remain constructive long term on the regional banks. Our
general view is that the large cap banks in our universe have
been very focused on relationship lending and we don't view
foreign bank CRE as the best data point," Horowitz said.
(Reporting by Niket Nishant in Bengaluru; Editing by Sriraj
Kalluvila)
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