The era of low interest rates is over, at least for the dollar. However, the links between interest rates and banking services are sometimes complex. For example, Credit Suisse (CS) makes only a very general statement: “In terms of overall interest rate sensitivity, the banking sector expects a positive impact on net interest income if US dollar interest rates rise. One driver of this positive effect will be a net increase in net interest income. Interest income from deposit business.
About half of CS’s assets under management are in dollars. When interest rates rise in dollars, these holdings increase – profitable for the customer and the bank.
More customer deposit
One of the beneficiaries of higher dollar interest rates is UBS, which accounts for two-thirds of clients’ dollar assets. “A parallel shift in yield curves of +100 basis points in global wealth management, retail and corporate banking will result in an overall increase in annual interest income of about $1.6 billion,” UBS Chief Financial Officer Kirt Gardner said in October. . Due to the high concentration of deposits in US dollars, a large part of this amount of 1.6 billion dollars will accrue in the United States. UBS Group’s net interest income in 2020 was approximately $5.9 billion.
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