Financial exchange traded funds were positive Wednesday with all eyes on the Federal Reserve announcement despite declines in shares of Citigroup (NYSE: C) and Bank of America (NYSE: BAC). Both stocks were down nearly 1%.
Banks and financial-sector ETFs have trailed the market this year on regulatory concerns and a weak lending market.
“Given increased pressure on fee revenue at the banks, interest income (driven by loans) will likely be the key to revenue growth going forward,” Deutsche Bank analysts led by Matt O’Connor said in a note Tuesday.
However, private sector leverage “remains above historical averages – which may suggest more deleveraging is needed before meaningful loan growth returns,” they added.
“Balance sheet growth for the U.S. banking industry continues to struggle amid a tepid economic recovery and flagging demand for consumer credit,” Sterne Agee analysts wrote in a report Wednesday.
Financial Select Sector SPDR Fund (NYSEArca: XLF) was fractionally higher Wednesday.
Financial Select Sector SDPR Fund
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