Deposits Now Matter Again: 5 Bank Stocks to Buy
Since the pandemic began, bank deposits -- which are typically among the most important things bank investors focus on when analyzing bank stocks -- haven't really mattered as much as they normally do.
That's because interest rates were at or near zero and the Fed was pumping trillions of dollars into the economy, which led to deposits flooding into the banking system. But now that time is over. The Fed is pulling liquidity out of the economy, and interest rates have shot up this year as the Fed tries to get inflation under control.
Suddenly, deposit costs are rising. According to the Federal Deposit Insurance Corp.'s (FDIC) quarterly banking profile, average funding costs rose to 0.64%, which is up by 38 basis points (1 bps = 0.01%) from the second quarter. Banks with low-cost, sticky deposit bases will be able to grow their margins in 2023 and outperform.
Source Fool.com
