Banking stocks could be about to resume their uptrend again after a period of consolidation. Banking stocks had doubled since the March 2020 market crash. However, from June 2021 onwards, the price seemed to have reached a peak. The price action now seems to suggest that a breakout is imminent. Regional banks like Fifth Third Bancorp could benefit from the new trend in finance and banking stocks. It is a banking group focused on the midwestern US. Fifth Third is among the largest banks in the US and also a part of the Fortune 500 list. The US and EU are emerging from the pandemic, and economic activity is gradually going back up. While not all sectors are back to pre-pandemic levels, more and more industries are getting close to those levels, and some have surpassed their 2019 numbers. It may be a good time to look for banks stock to invest in.
Investment Banking And Lower Provisions
Banks in developed economies appear to be reducing the provisional capital that they had set aside in anticipation of defaults. The businesses in these countries seem to be emerging well from the pandemic, and there is now a feeling that the worst effects may be over. Some commentary is also suggesting that investors are re-evaluating their stance of 2020 regarding banks and whether they were over-pessimistic about the effects of the pandemic. There is another school of thought that involves the way provisions are recorded. US accounting rules require banks to provide for loan losses a little bit earlier rather than wait till the borrower actually fails to make repayments. Banks had been conservative in making such provisions. However, with government support to individuals and businesses, the instances of loan losses have been lower than expected, and banks are now reversing the provisions which were made earlier. This is building up positive sentiment. If you are bullish on the sector, then now may be a good time to look for banks stock 2021.
Banks Stock To Invest
Fifth Third Bancorp’s stock, identified by its ticker symbol FITB, is listed on the Nasdaq exchange. The price last closed at $38.21 on 16th August 2021. The dividend yield at the time was a reasonable 2.83%.