In this edition, we examine the outlook for U.S. banking loan growth after a strong second quarter. Several banks, including JPMorgan Chase and Bank of America, continue to expect mid- to high-single-digit growth in loans for 2022 despite concerns over interest rate hikes and strengthening headwinds. However, some lenders such as Wells Fargo have warned of a slowdown in coming quarters. Banks already have started a broad tightening of loan standards as the economic environment weakens, according to the Federal Reserve.
U.S. private equity and venture capital investments in mainland China have declined in 2022 amid concerns about the country's macroeconomic picture. Aggregate deal valuation stands at $5.75 billion as of Aug. 9, compared to $33.64 billion for all of 2021, according to S&P Global Market Intelligence data.
France, historically Europe's largest exporter of electricity, has become a net importer for most of 2022 due to an aging, severely underproducing nuclear fleet. Planned maintenance and unexpected technical problems have shut more than half of state-controlled Electricité de France's 56 nuclear reactors, which typically account for about 70% of France's power mix. The nuclear outages, combined with unprecedented low hydropower production and Europe's gas crisis, raise the prospect of power shortages as the weather turns colder.
- In Focus: U.S. Banks' Loan Growth
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US banks' loan-to-deposit ratio jumps as loan growth soars, deposit growth slows
Total loans and leases at U.S. banks amounted to $11.771 trillion in the second quarter, up 8.4% from a year ago, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
Headwinds for loan growth after strong Q2
Banks have started to tighten loan standards, and a loss of economic momentum is weighing on the growth outlook.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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Early-stage delinquencies continue to rise at US banks in Q2
Early-stage delinquencies, or loans and leases past due between 30 days and 89 days, increased by approximately 34% to $49.42 billion in the second quarter from $36.97 billion in the year-ago quarter.
—Read the full article from S&P Global Market Intelligence
Rising interest rate environment weighs on US bank M&A
Rapidly rising interest rates resulted in massive unrealized losses in banks' available-for-sale securities portfolios and altered the math in M&A transactions.
—Read the full article from S&P Global Market Intelligence
Foreign banks reap higher profits from Russian units as Putin closes exit route
Plans by OTP Bank, Raiffeisen Bank International and UniCredit to exit Russia have been complicated by a decree banning the sale of bank stakes held by investors from countries that sanctioned Moscow.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Insurance
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US life industry death benefits fall to 10-quarter low as pandemic strain eases
Several leading carriers reported favorable trends in COVID-19 and non-COVID-19 mortality in the second quarter. Death benefits are likely to fall year over year in the third quarter as well.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Real Estate
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Majority of US REITs top consensus FFO estimates for Q2
In total, 94 of the 130 analyzed real estate investment trusts topped consensus estimates for funds from operations per share in the recent quarter, 18 had FFO per share that were in line with analyst estimates and 18 fell short.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Private Equity
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US private equity interest in China declines as economic activity weakens
Deal values for transactions in mainland China involving U.S. private equity firms declined 78.5% year over year in the second quarter, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Fintech
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Banks find new banking-as-a-service customers as neobanks pull back
Neobanks, viewed as the bread and butter of banking-as-a-service, face questions about the viability of their business models. Community banks are increasingly turning to embedded finance companies to drive their partnership strategies.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Credit and Markets
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U.S. Weekly Economic Commentary: No recession through July
New economic data strongly suggest that the U.S. did not enter a recession in the first half and that real growth likely remained positive into July, according to IHS Markit, a part of S&P Global.
—Read the full article from S&P Global Market Intelligence
Inflation and unrest in sub-Saharan Africa
Inflation in developed economies and in the sub-Saharan African region has accelerated. Central banks responded and in most instances policy rates have been adjusted upward to stem price pressures.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy and Utilities
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France rues missed opportunities as 'predictable' winter energy shortages loom
While most of Europe anticipates a challenging winter due to diminishing Russian gas supplies, nuclear giant France is bracing for problems that are mostly homemade.
—Read the full article from S&P Global Market Intelligence
Top developers plan 92.1 GW of wind, solar projects in U.S. through 2026
Majority of the planned capacity is solar projects, with the top 10 developers working to construct 51.1 GW. NextEra has the most capacity of combined U.S. wind and solar projects with 18,496 MW.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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Battery-makers slash cobalt intensity in the face of accelerating demand
Battery-makers have been able to reduce their cobalt reliance amid price and human rights concerns, but cobalt demand is still expected to increase in response to growing electric vehicle sales.
—Read the full article from S&P Global Market Intelligence
Technology, Media and Telecommunications
European telcos chase Big Tech's cash
Big Tech is facing pressure to contribute to the development of European telecom infrastructure. Critics of this approach say creating financial ties between tech and telecom networks could damage net neutrality.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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The Week in M&A
Canadian banks look to US markets for acquisition targets
Gaming industry gold rush targets popular software developer
Private equity wades into cybersecurity subsector consolidation
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IHS Markit is now part of S&P Global.
Written and compiled by Louis Bacani