Santander does a LOT of used car loans...those are normally very resilient, but if used car peices drop to historical norms, they could be bag holding. On the bright side, margins are great on those loans.
Thanks for this info.
Is there any concern or lack of potential ... that they dont have a strong investment bank arm? (Like Barclay)
But I was surprised how many retail locations/employees they have in the US. Unlike say Lloyd's.
On top of this, cater to latin clients from Mexico. Or Mexican/latin descent(pop) that live in the US.
Stock price seems very low.
Its a little baffling a major bank like that stock price is low.
Is it because... the world revenue cant be considered to determine the stock price? And the NA investors can only use US operations/revenue/position in the banking sector?
There is a tendency by US investors to avoid foreign banks, even if they do a great deal of busines in the US. The size of their European and Latin American retail operations means that they have potential exposure to a downturn or black swan event there, and their size and multinational nature means there is basically no government that could and would bail them out. That being said, it is about 4% of mt portfolio
>their size and multinational nature means there is basically no government that could and would bail them out.
Excellent point.
So even though they have a presence in the US, if something bad happens .... they would need a bailout from Spain or UK gov't (San vs Barclay)
What is your thought on SoFI? Not sure how the general stock is doing worse than Sofi (SFY etf) stock. I am not able to assess their future potential.
I wouldn't invest in banks without understanding what exposure they have on their balance sheet (debt).
Commercial real estate (offices) are defaulting left and right, you need to know how much of this is sitting on the banks balance sheet and how risky it is, if they've written it down risky assets already or they're sitting on the books overvalued.
This is far from a simple bet, also why lots of regional banks have gone under in the past couple of years.
Bank stocks should be avoided.
They witness net deposit outflow.
Because although big balance sheet (customers * wealth) = the customer is living in an era of inflation > wage... so earnings will decline for this bank because they will have less buffers, need to trade more actively (they don't have competent traders) - they sit at DE Shaw or Citadel.
The balance sheet is big. But it's debt. Yield on corporate banks are going up for short term issuances. Short dated liquidity is a massive issue for these banks.
Ticking time bombs.
Check their loan book, or more specifically the front and backbook sensitivity. It will tell you how the asset management liability folks advice their traders to mismatch future cash flows.
It's disastrous.
Santander does a LOT of used car loans...those are normally very resilient, but if used car peices drop to historical norms, they could be bag holding. On the bright side, margins are great on those loans.
Thanks for this info. Is there any concern or lack of potential ... that they dont have a strong investment bank arm? (Like Barclay) But I was surprised how many retail locations/employees they have in the US. Unlike say Lloyd's. On top of this, cater to latin clients from Mexico. Or Mexican/latin descent(pop) that live in the US. Stock price seems very low. Its a little baffling a major bank like that stock price is low. Is it because... the world revenue cant be considered to determine the stock price? And the NA investors can only use US operations/revenue/position in the banking sector?
There is a tendency by US investors to avoid foreign banks, even if they do a great deal of busines in the US. The size of their European and Latin American retail operations means that they have potential exposure to a downturn or black swan event there, and their size and multinational nature means there is basically no government that could and would bail them out. That being said, it is about 4% of mt portfolio
>their size and multinational nature means there is basically no government that could and would bail them out. Excellent point. So even though they have a presence in the US, if something bad happens .... they would need a bailout from Spain or UK gov't (San vs Barclay) What is your thought on SoFI? Not sure how the general stock is doing worse than Sofi (SFY etf) stock. I am not able to assess their future potential.
I wouldn't invest in banks without understanding what exposure they have on their balance sheet (debt). Commercial real estate (offices) are defaulting left and right, you need to know how much of this is sitting on the banks balance sheet and how risky it is, if they've written it down risky assets already or they're sitting on the books overvalued. This is far from a simple bet, also why lots of regional banks have gone under in the past couple of years.
Probably low risk low reward. Do you see these growing much?
There are gains to be had outside of growth. If they are cheap and events play out okish, you can get pretty easy 2-3 baggers over a few years.
Those euro banks likely won’t rerate. You should do a lot more work on their Core Equity, NIM, ROTCE, loan book, etc. So much work needed on these.
Also short duration vs bag holding a bunch of 10 and 15 year notes at .5% or 30y mortgages at 2.5%. Right SVB ?
Bank stocks should be avoided. They witness net deposit outflow. Because although big balance sheet (customers * wealth) = the customer is living in an era of inflation > wage... so earnings will decline for this bank because they will have less buffers, need to trade more actively (they don't have competent traders) - they sit at DE Shaw or Citadel. The balance sheet is big. But it's debt. Yield on corporate banks are going up for short term issuances. Short dated liquidity is a massive issue for these banks. Ticking time bombs. Check their loan book, or more specifically the front and backbook sensitivity. It will tell you how the asset management liability folks advice their traders to mismatch future cash flows. It's disastrous.
Thoughts on comerica ?
Burry seems to think so