Pub. 5 2016 Issue 6

August 2016 27 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s RATE WORRIES RENEWED AS BIG BANKS READY TO POST Q2 EARNINGS By Chris Vanderpool and Kevin Dobbs Filename:716BCBS003-WMKB_Meeting_KS_Banker_7.5x4.625_3_0_DF Client: Blue Cross Blue Shield Paper: Kansas Banker Magazine for Kansas Working When Kansans work, they’re doing more than making a living. They’re making a difference. And that makes Kansas more of everything we all love. Blue Cross and Blue Shield of Kansas works for Kansas workers and their families. We give you the card more doctors and hospitals respect. Coverage and price options that suit you best. And nearly 75 years of making everything about health insurance easier. N.1613 An independent licensee of the Blue Cross Blue Shield Association bcbsks.com A NALYSTS ARE LOOKING for the nation's biggest banks, as a group, to show loan growth and top-line improvement when they report second-quarter results this month. But new global economic uncertainty has prolonged downward pressure on interest rates and could crimp loan demand, creating concerns that could color outlooks for the remainder of the year. In the aftermath of the Brexit vote — the U.K.'s decision to leave the European Union — investors have grown wary about both the estimated two-year exit process and the possibility of recession in the U.K., as well as fallout elsewhere in Europe. Confusion about how the U.K. will leave could freeze activity and hurt big U.S. banks doing business there, analysts say. What is more, they say, broader fiscal woe could infect the global economy and, by extension, hinder U.S. economic momentum. "That's critical for folks to bear watching," Nomura analyst Steven Chubak said during a post-Brexit-vote call with clients and reporters. Stephens Inc. analyst Terry McEvoy said in an interview that, prior to the June 23 vote, the U.S. economy appeared generally healthy and banks were experiencing decent loan demand. Growth on that front likely helped fuel revenue expansion, he said, bolstering many banks' second-quarter results. Among the 20 largest U.S. banking companies, analysts on average expect 19 of them to post second-quarter revenue levels that are greater than the previous quarter. "I think second-quarter results are looking OK," McEvoy said. "What I am uncomfortable with is the second half of 2016." In the wake of Brexit, "What happens to business confidence? That becomes difficult to predict when people are uncertain and are questioning the potential health of the economy."