Regional Banks Brace for More Pain as Interest Rates Rise

Regional banks experienced a significant sell-off as weak quarterly earnings reports highlighted the negative impact of higher interest rates. The SPDR S&P Regional Banking ETF (KRE) fell 2.5%, with Regions Financial leading the decline with a more than 12% drop. Several other banks, including Comerica and Fifth Third Bancorp, also tumbled by 5% or more. The banks warned of further declines in net interest income (NII) due to rising rates, which could lead to losses on bond portfolios and funding pressures. The Federal Reserve's commitment to keeping rates higher for longer to combat inflation adds to the concerns.