Kroll Bond Rating Agency (KBRA) announces the release of this months edition of Bank Talk: The After-Show, by Ethan Heisler, founder and editor-in-chief of The Bank Treasury Newsletter and Senior Director for KBRA.
In the discussion, Normalizing the Good Times, we hear from Ethan and Van on why bank analysts view the prevailing low level of loan loss experience on commercial bank balance sheets as unsustainablemeaning that earnings are vulnerable when losses revert to their mean and that analysts should be braced for that adjustment whenever it comes. Ethan argues why that adjustment may take a while given the lengthening horizon for the next recession. But Van reminds Ethan that the credit perspective already incorporates cyclical credit losses in credit-scoring financial institutions. Ethan then illustrates his counterpoint using a back-of-the-envelope method consisting of long-term moving averages to estimate the benefit of low loan loss rates on bank returns.
To view the report, click here.
Related Publications: (available at www.kbra.com)
- The Bank Treasury Newsletter Chart Deck “ February 2019
- Bank Talk Podcast “ February 2019
- The Bank Treasury Newsletter “ January 2019
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KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
Heisler, CFA, Senior Director
Hesser, Senior Managing Director