Slowing Loan Growth and Loan Quality in Banking Outlook. Wall Street was lower at the beginning of the week, with the S&P500 and Nasdaq down 0.8%; Dow Jones down 0.7%. Investors are watching the 2Q22 Banking disbursement of Corporate Loan, which is higher, but to cover the increase in costs due to soaring inflation, may affect Loan Quality. Banks also face the risk of a slowdown in Loan Growth, if the economic outlook worsens. In order to support the Bottom Lines, the Banks focused on increasing Net Interest Income, taking advantage of the increase in FFR. Analysts have even projected a high Net Interest Income increase, and exceeded expectations. Currently, banks are benefiting from the increase in the Lending Rate which is faster than the Deposit Rate. The high liquidity during the pandemic has also enabled banks to maintain their Cost of Funds.
Consumer Non-Cyclicals and Finance lead sectoral gains, ahead of a number of Earning Results next week. Earlier in the week, the JCI had touched a high of 6,702 before finally closing slightly higher 7 points to a level of 6,659. Yesterday’s JCI movement was also influenced by pressure from one of the large-cap Technology stocks which had recorded a low auto reject. Meanwhile, investors observed a number of Consumer Non-Cyclicals stocks which were relatively resilient to the potential for rising inflation, making this sector closed up more than 1%. Investors are also keeping a close eye on a number of shares of the Big Four Bank, ahead of the Earning Results and after the increase in Statutory Reserves. In the midst of a number of sentiments, NHKSI Research projects the JCI to move upward in the range of 6,600-6,800.
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