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Quarter-End Insights

Financial Services: Investment Services Competition Is Heating Up

The economy remains relatively strong, but we’re seeing pressure in funding costs, net interest margin growth, and credit costs.

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  • We assess the global financial-services sector as approximately fairly valued. It has recently traded at a market-cap-weighted price/fair value estimate ratio of 0.96--a 4% discount to what our analysts believe the sector is worth.
  • While the economy remains relatively strong, increased competition among banks shown in rising funding costs are slowing net interest margin growth, and uncertainty regarding credit costs is increasing.
  • There is a general easing of financial regulation in the United States, but signs of tightening in China, Australia, and Europe.
  • Strategic moves in the United States' investment services industry heated up in the third quarter.

Americas Financials Update
By Brett Horn, Eric Compton, Greggory Warren, and Michael Wong

Michael Wong does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.