It warned lenders will find it harder to make money as interest rates remain high, funding costs climb and a potential recession looms. It also cited some lenders’ exposure to commercial real estate as a risk.
Calls convey the right to buy shares at a fixed price in the future and are usually used to bet on shares rising. Put options give the right to sell shares and express a bearish or defensive view. The collapse of three mid-sized U.S. banks earlier this year and record deposit outflows from smaller lenders sparked investor concerns about the broader banking industry, but no further bank failures and resilient economic data have helped shore up investor sentiment since May.
“There has been a change in deposit mix leading to higher cost of funding which remains a concern,” he added.