Today is Tuesday, December 8, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition of Insight Weekly, we take a close look at the U.S. and European banking sectors as they brace for looming recessions. U.S. banks continued to tighten lending standards in the third quarter as demand for commercial and industrial loans also dropped for the first time in more than a year. As a result, median growth in gross loans across the 15 largest publicly traded banks slowed to a sequential rate of 0.7% from 4.4% in the second quarter, according to S&P Global Market Intelligence data. In Europe, the biggest lenders are likely to set more money aside for possible loan losses in the fourth quarter, having already bolstered provisions in the third quarter.
Private equity and venture capital deal value in central and Eastern Europe amounted to $4.25 billion in the year through Nov. 16, marking an 88% surge from the full-year total in 2021, S&P Global Market Intelligence data showed. Industry players expect private equity activity in central and Eastern Europe to expand further as the region's economic growth consistently outperforms Western Europe.
The number of shipping containers carrying solar photovoltaic panels to U.S. ports jumped 59% sequentially in the third quarter after U.S. President Joe Biden waived some import tariffs in June, according to research firm Panjiva. The import resurgence comes as U.S. developers race to complete delayed solar projects and several domestic producers expand their U.S. manufacturing footprints.
- In Focus: U.S. and European Banks
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Lending slows as US banks brace for recession
Demand for commercial and industrial loans has dropped for the first time in about a year and a half as lending standards ratchet tighter.
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Europe's banks to set aside higher bad loan provisions as recession looms
Of the 25 largest banks on the continent, 19 reported either higher loan loss provisions or actual provisions versus provision releases in the third quarter compared to a year ago.
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- Deep Dives: Financials
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US bank margins jump in Q3, mark quickest expansion in more than a decade
Swift tightening by the Federal Reserve helped bank margins rebound strongly from depressed levels in the third quarter.
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Credit card delinquencies, charge-offs rise on path to normalization
Delinquency rates and net credit losses remain well below pre-pandemic levels, and the increases are expected, bank executives said.
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Raiffeisen takes crown of Europe's most efficient big bank in Q3
Austria-based Raiffeisen Bank International, one of the few European banks that retain significant exposure to Russia, cut its cost-to-income ratio by almost 20 percentage points in the third quarter.
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Japan megabanks' resilience to shocks hit by weaker yen, rising global rates
While the banks' common equity tier 1 ratios are still above the regulatory minimum of 4.5%, the downtrend of the ratio will likely force the megabanks to replenish their core capital more quickly or offload riskier assets.
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- Deep Dives: Insurance
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E&S premiums accounting for larger share of US property and casualty market
U.S. excess and surplus direct premiums surged by 27.6% during the first six months of 2022 and now account for 8.7% of the total direct premiums written within the country's property and casualty market.
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- Deep Dives: Consumer
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451 Research: Consumer holiday spending expected to pull back after surge in 2021
The upcoming holiday season is boosting U.S. consumer spending plans compared with the third quarter, yet the overall holiday spending outlook appears lower than 2021, and the current increase is largely being driven by higher-income households.
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- Deep Dives: Real Estate
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Vulnerable housing markets in Europe can deepen recessions
Residential real estate prices have been rising amid low interest rates, boosting affordability and making investments in real estate more attractive.
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- Deep Dives: Private Equity
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Private equity deal value in central and Eastern Europe soars
Investments backed by private equity firms in central and Eastern Europe grew to $4.25 billion during the year to Nov. 16, from $2.25 billion in 2021, S&P Global Market Intelligence data shows.
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- Deep Dives: Credit and Markets
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Flash PMI data signal falling output in the US, Europe and Japan
Output fell at increased rates on average across both the manufacturing and service sectors of the U.S., eurozone, U.K. and Japan, pointing to a broad-based economic malaise.
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- Deep Dives: Energy and Utilities
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Institutional shale gas investors take Q3 profits as commodity prices fall
Of the 10 upstream shale gas stocks surveyed by S&P Global Market Intelligence, only three saw a net increase in investment by institutional traders.
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Volatile markets a boon for European utilities in Q3 but high prices raise risk
Most European utilities exceeded earnings expectations during the third quarter as they captured value from high and erratic markets with limited policy guardrails. Interventions will start to bite soon, though.
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RRA Research: Va. regulator resignation could leave 2nd commission vacancy in 2023
The vacancy on the Virginia State Corporation Commission comes at a time when the state is mired in controversy concerning energy policy, with Republican Gov. Glenn Youngkin working to reverse or at least slow the pace of energy transition policies.
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- Deep Dives: Technology, Media and Telecommunications
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Artificial intelligence stocks tumble as economic concerns complicate growth
Professional service and software providers like Palantir, C3.ai and Veritone market themselves as AI companies with high growth potential. Economic headwinds are challenging that growth story.
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- Deep Dives: Metals and Mining
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Metals and Mining Research: IM November 2022 – Exploration index hits 29-month low
S&P Global Market Intelligence's Pipeline Activity Index fell below 100 for the first time since June 2020 as all metrics declined.
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- Deep Dives: ESG
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Republican attorneys general target Vanguard's ESG policies in protest with FERC
A coalition of Republican attorneys general representing fossil-fuel heavy states filed a protest with the Federal Energy Regulatory Commission targeting The Vanguard Group's environmental, social and governance policies.
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- The Week in M&A
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RBC to acquire HSBC Canada in C$13.5B all-cash deal
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TIAA Bank sale agreement follows pattern of insurers divesting depositories
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SSE wraps £1.47B stake sale in transmission assets to Ontario Teachers
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Deal Profile: Illinois-based Byline Bancorp, Inland Bancorp to merge in $165M deal
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The Big Number
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According to Market Intelligence
In this edition of According to Market Intelligence, we look into our crystal ball for the year ahead and explore these topics in depth via our Big Picture: 2023 Outlook reports.
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