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December 7, 2022 | Premium Service | In this issue of The Institutional Risk Analyst, Whalen Global Advisors LLC publishes the latest edition of The IRA Bank Book, the quarterly outlook for the US banking industry. The highlights of the new edition of The IRA Bank Book include:
Rising interest rates caused accumulated other comprehensive income (AOCI) for the US banking industry to rise almost 40% in Q3 2022 to $347 billion or roughly 25% of total tangible capital.
Year-end AOCI could hit $500 billion depending upon the rate of interest rate increases by the FOMC, asset sales and the movement of available-for-sale assets into portfolio (HTM)
Rapidly rising interest rates in Q3 2022 pushed down the tangible capital for the US banking industry to negative $1.9 trillion under a moderate stress scenario.
The big area of danger for the banking industry in 2023 continues to be market risk generated by rising interest rates. Market risk is effectively becoming outsized credit risk that threatens the solvency of banks and nonbanks alike.
Source: FDIC
Copies of the IRA Bank Book for Q4 2022 are available to subscribers to the Premium Service of The Institutional Risk Analyst. Standalone copies of the report are also available for purchase in our online store. Media wishing to receive a courtesy copy of the report please email: info@theinstitutionalriskanalyst.com
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