Investors are jumping back into bank ETFs ahead of earnings season
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Some of the biggest exchange traded funds focused on banks and other financial stocks are seeing solid interest from investors as the failures of Silicon Valley Bank and Signature Bank recede in the rearview mirror. The Invesco KBW Bank ETF (KBWB) has pulled in more than $100 million of new cash over the past week after seeing heavy outflows near the peak of bank crisis last month, according to FactSet. The SPDR Regional Bank ETF (KRE) , which has had volatile but still net positive flows since the SVB collapse, scooped up another $241 million over the past week. Similarly, the financial sector ETFs from State Street ( XLF ) and Vanguard ( VFH ), which track banks in addition to other financial stocks, have pulled in more than $500 million combined over the past week. The new inflows come just ahead of earnings season for the banks. JPMorgan , Citigroup and Wells Fargo are all slated to report earnings on Friday, with other large and regional names following suit over the next two weeks. Investors will be focused not only on the profits that banks make, but also their balance sheets. Many analysts expect the reports to show that depositors moved their cash from small regional banks and parked it at larger banks that are perceived to be safer. JPMorgan CEO Jamie Dimon and Berkshire Hathaway CEO Warren Buffett have both warned this month that the regional banking crisis is not over , but statements from regional bank CEOs and some Wall Street analysts suggest that conditions are much calmer now. “Based upon the macro deposit trends disclosed by the Federal Reserve … and our conversations with bankers, we believe the deposit flight triggered by the SIVB and SBNY failures is over,” RBC Capital Markets analyst Gerard Cassidy said in a Wednesday note to clients. “Though the deposit flight is over, in our opinion, well-capitalized large banks may be called upon in the near future to assist the regulators with handling other banks that may be experiencing interest rate duration problems that plagued SIVB and SBNY,” Cassidy added. But even if confidence is returning for depositors and ETF investors, the stock prices of banks are still struggling to rebound. The Invesco KBWB fund is down about 18% year to date. KBWB YTD mountain Bank ETFs are seeing interest but not yet rebounding. — CNBC’s Michael Bloom contributed to this report.
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