Moody’s Analytics Issues Initial Commentary Following Stress Test Results

Moody’s Analytics issued some initial commentary ollowing release of Dodd-Frank Act Stress Test (DFAST) results:

Mark Zandi, Moody’s Analytics Chief Economist:

“This year's CCAR scenarios set a high bar for the U.S. banking system. They are arguably the most stressful stress tests yet. The nation's big banks must weather a downturn more severe than the Great Recession and even negative interest rates."

Anna Krayn, Senior Director at Moody’s Analytics:

"Today’s DFAST results show that capital levels in the industry are high enough to withstand even a very severe scenario of negative interest rates. The focus now turns to banks’ internal risk management processes and future planned capital distributions."

"The annual "surprise" of Fed scenarios challenges banks internal scenario planning that forms the basis of their capital submission for CCAR."

"Meeting the quantitative benchmark is just the first step. We are expecting to see greater divergence in next week’s results, once the focus turns to qualitative aspects and proposed capital distributions."

Ed Young, Senior Director at Moody’s Analytics:

"Today’s test is only the first step in the annual capital planning review process. In next week’s results we expect to see greater emphasis on risk identification and internal controls at the enterprise level."

"Leading banks are transforming stress testing programs from regulatory compliance exercises to strategic management processes."

"The divergence between regulatory and banks forecasts of revenue and losses is likely to continue and, as a result, we expect to see an ongoing emphasis model refinements."

You May Also Be Interested In

• Citi Upgrades United Microelectronics Corp (2303:TT) (UMC) to Buy 'with limited downside'
• Boston Scientific (BSX) PT Raised to $80 at BTIG
• Compass Minerals International (CMP) PT Lowered to $15 at Deutsche Bank