NEW YORK, NY -- (Marketwire) -- 01/30/12 -- Regional banks such as Synovus Financial and Huntington Bancshares -- already struggling to boost revenues due to the low interest rate environment -- are likely to expect further pressure on their margins after The Federal Open Market Committee said that economic conditions are likely to warrant "exceptionally low levels for the federal funds rate at least through late 2014." According to a recent article from Reuters, commercial and industrial lending has been the sole bright spot in an otherwise lackluster loan environment, pointing to an improving economy. Five Star Equities examines investing opportunities in the Regional Banking industry and provides equity research on Synovus Financial Corporation (NYSE: SNV) and Huntington Bancshares, Inc. (NASDAQ: HBAN). Access to the full company reports can be found at:
www.fivestarequities.com/SNV
www.fivestarequities.com/HBAN
The Fed gave a bleak outlook for the economy, prompting speculation that it was preparing the way for QE3, Bloomberg reports. Federal Reserve Chairman Ben Bernanke said the Federal Reserve would not hesitate to take further action if the country continues to "have this unsatisfactory situation."
According to a recent article from Bloomberg, the decision could hurt bank profits as they struggle to find loans or securities with yields high enough to support their net interest margins, a gauge of profitability that measures the difference between the cost of funds and what they earn on assets.
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Richard Staite, a London-based analyst with Atlantic Equities LLC argues that banks may be able to avoid some of the negative impact of low rates if the Fed's policy fuels economic growth and lending picks up. "The best thing the Fed can do is promote economic growth, even if that requires a sustained period of low interest rates," Staite told Bloomberg. "Loan growth will be the most important factor to helping banks offset the negative impact of low rates."
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