Many bank investors are looking forward to a Federal Reserve rate rise, as this could impact the Treasury environment in such a way as to make the lending business more profitable. But some banks are liable to be helped much more than others.
The Fed is widely expected to raise short-term interest rates this year. This could increase long-run inflation expectations, leading to an eventual steeping of the yield curve (meaning that long-term rates will rise in relation to short-term rates). As borrowing in the short term to lend for the long term becomes more profitable, bank earnings are expected to rise.
However, Larry McDonald, head of macro strategy at Societe General, says banks won't be affected equally.