Yet the KBW Nasdaq Bank Index dropped more than 2% on the day, and shares of trust bank State Street, which also reported Friday, fell 12%. That increases banks’ deposit costs even beyond what their average deposit rates indicate. The big banks also do more of the kinds of lending that offset those funding cost increases, namely credit cards, whose interest rates float higher. At trust bank State Street, non-interest-bearing deposits fell more than 20% at the end of the second quarter from the end of the first. If State Street is any indication, investors may react harshly to any disappointments on deposits.

Source: Wall Street Journal July 17, 2023 18:21 UTC