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Wells Fargo Equity Research thinks Popular (NASDAQ:BPOP) is “best positioned” for a higher-for-longer interest-rate environment, given its strong outlook for net interest income, while fellow regional lenders First Interstate BancSystem (NASDAQ:FIBK) and BOK Financial (NASDAQ:BOKF) are “most at-risk.”
With sticky inflation data so far this year reducing the likelihood the Federal Reserve will cut rates anytime soon, Popular’s (BPOP) NII growth outlook of 9%-13% growth Y/Y in 2024 “now looks even that much better vs. a group that’s seeing NII inflection pushed out,” analyst Timur Braziler wrote in a note.
“We look for continued commercial loan demand and group-low incremental funding costs to drive 9% Y/Y NII growth,” he added.
On the other hand, the note said, liability-sensitive banks BancSystem (FIBK) and BOK Financial (BOKF) are expected to see the largest Y/Y declines in NII.
Braziler is assuming the Fed’s first rate cut to take place in July, followed by two more in September and December. “The back-end skew to our assumptions already had NII pressured for much of the group throughout 2024, and further rate-cut delays push out NII inflection,” he noted.
