First Republic Bank shares just crashed 50%. Here’s how ASX 200 bank stocks are responding

An older man wearing glasses and a pink shirt sits back on his lounge with his hands behind his head and blowing air out of his cheeks.

An older man wearing glasses and a pink shirt sits back on his lounge with his hands behind his head and blowing air out of his cheeks.

S&P/ASX 200 Index (ASX: XJO) bank stocks are holding their own in late morning trade on Wednesday.

Investors in the big four ASX bank shares will be keeping a close eye on the charts today following a 49.4% plunge in the First Republic Bank (NYSE: FRC) share price yesterday (overnight Aussie time).

We’ll look at the latest ructions to hit the United States’ banking sector in a tick.

First, here’s how the big four ASX 200 bank stocks are tracking at the time of writing:

  • Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are up 0.04%
  • National Australia Bank Ltd (ASX: NAB) shares are down 0.49%
  • Westpac Banking Corp (ASX: WBC) shares are down 0.34%
  • Commonwealth Bank of Australia (ASX: CBA) shares are down 0.41%

For some context, the benchmark index is down 0.09% at this same time.

The ASX 200 bank stocks look to be getting plenty of support from their very strong common equity tier 1 (CET1) ratios. This is a measurement of the core equity capital of a bank compared to its risk-weighted assets.

As The Motley Fool reported earlier in April, Australia’s big four banks are the most capitalised in the world. That should offer Aussie investors some peace of mind amid the banking turmoil hitting the US and Europe.

Now, here’s why investors were hitting the sell button on First Republic Bank.

ASX 200 bank stocks resilient amid new US bank meltdown

The First Republic Bank share price crashed overnight following the release of the bank’s first-quarter results.

As you can imagine by the sell-off, those results fell well short of expectations.

Among the big negatives, the bank reported its deposits decreased by US$105 billion over the three months.

Investors are already on edge following the collapse of Silicon Valley Bank and Signature Bank in March. That financial contagion quickly spread to Europe, resulting in the takeover of beleaguered Credit Suisse by Swiss rival UBS.

While ASX 200 bank stocks escaped the worst of that fallout, shares in the big banks did slide during March. Today, however, they’re showing resilience.

Commenting on the deposit outflows that helped send the First Republic share price into a nosedive, chief financial officer of First Republic Neal Holland said:

With the closure of several banks in March, we experienced unprecedented deposit outflows. We moved swiftly and leveraged our high-quality loan and securities portfolios to secure additional liquidity. We are working to restructure our balance sheet and reduce our expenses and short-term borrowings.

With First Republic already having received US$30 billion in emergency funding from larger banks last month, it remains to be seen how this plays out.

The post <strong>First Republic Bank shares just crashed 50%. Here’s how ASX 200 bank stocks are responding</strong> appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the ‘five best ASX stocks’ for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now…

See The 5 Stocks
*Returns as of April 3 2023

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/JDtTm24

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s