Why this global crisis hasn’t knocked banks off course

The global banking sector is navigating a crosscurrent of geopolitical uncertainty, a historic regulatory reset, and powerful structural forces — from AI adoption to the rise of private credit and stablecoins. In this episode, Gerard Cassidy and Anke Reingen, Co-Heads of Global Financials Research at RBC Capital Markets, discuss where U.S. and European banks stand today and what investors should be watching next.

• Banks’ fundamentals are strong, but the sector is vulnerable to sustained high oil prices.
• Smaller regional banks are outperforming the market.
• AI deployment, consolidation, and a resilient credit outlook are growth drivers.
• U.S. regulators are supportive; European regulation is softening to match.
• U.S. commercial loan growth is accelerating, supported by tax changes.
• Investment banks are posting growth and could benefit from a revival in IPOs.

Chapter markers:

• Introductions [00:07]

Host Joe Coletti introduces the podcast and guests: Gerard Cassidy and Anke Reingen, Co-Heads of Global Financials Research. They discuss the strong underlying fundamentals of the banking industry, despite continuing risk from prolonged war in the Middle East.

• Growth Drivers [06:58]

AI deployment, the growth of stablecoins, and continuing consolidation are among the main structural themes driving growth. Loans to NFDIs are a potential concern but banks are less vulnerable than the private credit sector.

• Regulation [13:30]

U.S. regulation is pro-bank, and the easing of capital requirements will feed balance sheet growth, dividend payments, acquisitions, and stock buybacks. Proposed regulation in Europe may soften to ensure its sector is not disadvantaged.

• Lending Volume [18:15]

Commercial loans, bolstered by tax changes, are the biggest element of U.S. loan volume growth. Incentives in Europe also boosted corporate loans, but confidence has since declined.

• Investment Banks [22:48]

Deregulation is strengthening the deal pipeline for investment banks. A rush to M&A before the end date of the U.S. administration could benefit them further.