This week, US bank stocks rose strongly, but it couldn't save depositors' confidence. The KBW Bank Index rose by about 7% this week, marking the strongest increase since May last year, significantly outperforming the 0.7% increase in the S&P 500 during the same period. Meanwhile, after seasonal adjustment, the total amount of deposits in the US plummeted by $78.7 billion last week, marking the largest weekly decline since March 22nd.
This week, US bank stocks rose strongly, but it couldn't save depositors' confidence.
Driven by banks such as Zions Bancorp and KeyCorp, the KBW Bank Index rose by about 7% this week, marking the strongest increase since May last year, significantly outperforming the S&P 500 Index's 0.7% increase during the same period.
Overall, the earnings reports of US bank stocks that have been disclosed in the second quarter reflect the impact of rising deposit costs. However, the more important information for investors is that these reports indicate that the US banking industry, especially the highly scrutinized small and medium-sized banks, has stabilized since the Silicon Valley bank collapse crisis in March.
Undeniably, the US banking industry still faces many problems with the shift in regulatory measures and the looming issue of commercial real estate credit. Nevertheless, the second-quarter reports have narrowed the decline in the industry's stock prices from 29% in May to 13%.
Meanwhile, bank depositors' funds continue to flow into money market funds, and the use of the Federal Reserve's bank rescue fund by banks remains at a historically high level (over $100 billion).
After seasonal adjustments, the total amount of deposits in the US plummeted by $78.7 billion last week, marking the largest weekly decline since March 22.
Non-seasonally adjusted deposits decreased by $90 billion.
This means that the gap between funds flowing into money market funds and funds flowing out of bank deposits is starting to narrow.
Large banks experienced a massive outflow of $78 billion last week, marking the largest weekly capital outflow since October 2022, while small banks experienced a slight outflow of $1.25 billion.
Without seasonal adjustments, large banks experienced a deposit outflow of over $100 billion that week, while small banks lost $6.5 billion in deposits.
Therefore, in the United States, there has been a run on bank deposits, with a significant outflow of deposits both seasonally adjusted and non-seasonally adjusted.
However, the situation on the lending side is more complicated. During the week, the loan amount of small banks decreased by a small margin of $10.3 billion, while the loan amount of large banks increased by $4.7 billion.
