2025-06-16-花旗集团-美国银行_本周图表-存款价值创造框架显示亨廷顿银行（HBAN）为差异化的特许经营机构_20页_589kb

US Banks: Summary

Core Content

This report provides an analysis of deposit value creation and its impact on bank performance, with a focus on regional banks and the broader banking sector. It highlights the importance of deposit cost, deposit growth, and deposit beta in evaluating the value creation potential of banks. The report also discusses the effects of the Treasury's General Account (TGA) and Reverse Repurchase Agreements (RRP) on reserve levels and liquidity, as well as the performance of US banks relative to the S&P 500 and the expected changes in earnings per share (EPS) for 2026.

Main Views

• Deposit Value Creation Framework:
  The deposit value creation is evaluated using a fund transfer pricing methodology. It combines deposit cost, deposit growth, and deposit beta to assess the change in value relative to earning assets.

  • HBAN stands out as a differentiated franchise, showing strong performance in both high and low rate environments.
  • The report suggests that regional banks, like HBAN, may be more resilient against the gradual decline narrative attributed to the dominance of large banks.

• Deposit Trends:

  • Deposits increased by ~$62 billion week-over-week (w/w) as of June 4, 2025, largely driven by TGA outflows returning to the banking system.
  • Loan growth and bank-held securities growth also contributed to deposit increases, though this was offset by higher bank borrowings and a decline in reserves.
  • The report forecasts deposits to remain flat to slightly down by the end of 2025 due to reserve pressures from TGA depletion and QT (Quantitative Tightening).
  • The TGA is expected to build back to normalized levels, and RRP runoff will help offset the reserve decline.

• Reserve Levels and Liquidity:

  • As of June 4, 2025, reserves have risen to ~$3.4 trillion, primarily due to TGA outflows.
  • The report forecasts a decline in reserves of ~$430 billion by the end of 2025, with RRP and QT helping to mitigate the liquidity impact.
  • The total reserves are expected to drop to ~$3 trillion by the end of the year, which will likely result in a drawdown of ~$300–$400 billion from the banking system.

Key Information

• Deposit Value Creation Components:

  • Starting Deposit Cost: The cost of deposits relative to Fed Funds rates.
  • Deposit Growth: The increase in deposit volume.
  • Deposit Beta: The sensitivity of deposit value to interest rate changes.

• Performance Analysis:

  • From 1Q25 to June 13, 2025, the BKX (Banking Index) performed in line with the S&P 500 (+13% vs +13%).
  • However, year-to-date (YTD), the BKX underperformed the S&P 500 (0% vs +2%).
  • The report includes a table showing the performance and expected EPS changes for various banks, indicating mixed results across the sector.

• Cost of Equity (CoE) Trends:

  • Large cap banks saw a rise in CoE by ~10 bps w/w to ~11.2%.
  • Mid-cap banks experienced a rise in CoE by ~30 bps w/w to ~12%.
  • The CoE is influenced by market implied values, call option volatility, and normalized Return on Tangible Equity (ROTE) and Return on Assets (ROA).

• Corporate Access Events:

  • Upcoming corporate access events include meetings with Ally Financial and Wells Fargo, with a focus on CFO interactions.
  • These events are invite-only and require prior request.

Summary Table

Analysts

• Keith Horowitz, CFA: Lead analyst for the report.
• Benjamin Gerlinger: Co-analyst.
• Terence Burke: Co-analyst.
• Emily Ericksen: Co-analyst.
• Kaili Wang, CFA: Co-analyst.

Notes

• The report includes important disclosures and analyst affiliations.
• Citi Research is a division of Citigroup Global Markets Inc., which may have conflicts of interest.
• Certain products are available only on Citi's portals.