It's time to buy banks. With the Trump Administration getting serious about amending Dodd-Frank, the 2008 related fines behind us and the FED starting to tighten the money supply banks are about to start generating very serious money.
Lower interest rates aren't necessarily bad for banks. It's true they make money by lending money for the long term but they finance those investments by paying interest on deposits. The spread between these is called the net interest margin. With the FED pushing down interest rates banks lowered short term interest rates as well. However if the FED rate goes below a few percentage points it will become impossible to maintain the same net margins unless the bank charges negative interest rates.
Large banks have been especially reluctant to do so. They have been taking the pain, retaining deposits and waiting for better times. If the FED moves rates up, banks… Read More …