North American FI Chart of the Month

...Increased Stress: Results of the Federal Reserve's (Fed) 2016 comprehensive capital analysis and review (CCAR) are due by June 30. Fitch expects the degree of modeled capital erosion under the Severely Adverse scenario will likely increase this year driven by assumptions of a more severe downturn, the inclusion of negative interest rates, and Fed-forecast balance sheet growth, despite higher starting capital ratios and moderating loss rate assumptions, in aggregate, over time. Big Banks Hit Hardest: The six largest U.S. banks will once again be subject to the add-on global market shock as part of their scenarios, and these banks, along with the largest trust banks, will also undergo the counterparty default scenario. As in the past, we expect the credit card banks, followed by the large regional banks, to fare best from a quantitative standpoint. Expanded Capital Return: Fitch also expects that capital requests will increase, and banks will press on the 30% dividend threshold. Banks have...

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