I know this forum has a focus on IB but was wondering if you guys have any insights on what the state of commercial and corporate banking looks like given the higher interest rate and recessionary environment.
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Everyone still needs debt. It’s way cheaper than equity financing.
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NI Margin actually doesn’t increase because the cost of funding also increases. If anything your return multiple decreases because both your numerator and denominator in the equation are increasing.
Sorrry man- but you are Incorrect. I've lived through it more than once. Well capitalized banks' cost of funds are not increasing in an increasing rate environment in step with interest income.
I work in commercial/corporate and we are doing way less loans but but the spread on these loans is big so they are way more profitable. I could be wrong but I think my role is about to switch more to managing risk than new deals. My MD has wanted to know which companies survived stagflation last time it was in America, major inflation in America, and who survived the 08 crises. Any company that did not survive one of those has to be evaluated for those scenarios.
That's exactly correct- less deals- but more profitable ones and more focus on credit quality.
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