Bank Stocks Rise Amid Expectations of Interest Rate Hikes

 
Bank stocks are experiencing a broad rally as expectations grow for interest rate hikes in the second half of the year.
 
As of 11:15 a.m. on June 23, Jeju Bank shares rose 12.19% (1,230 won) to 11,320 won. Other major bank stocks also showed gains, including Shinhan Financial Group (2.36%), Woori Financial Group (1.51%), JB Financial Group (1.19%), BNK Financial Group (0.83%), KB Financial Group (0.25%), and Industrial Bank of Korea (0.24%).
 
The surge in bank stocks is attributed to increasing expectations for additional interest rate hikes by the U.S. Federal Reserve. Recently, Bank of America (BofA) and Deutsche Bank revised their previous forecasts of a rate freeze for the year, now predicting rate increases. BofA anticipates three rate hikes of 0.25 percentage points each in September, October, and December, while Deutsche Bank expects two hikes this year.
 
Earlier, the European Central Bank (ECB) raised its three key policy rates by 0.25 percentage points on June 11. The Bank of Japan also raised its benchmark interest rate by nearly 1% on June 16, marking the first increase in 31 years. Consequently, the market now sees a high probability that the Federal Reserve will raise rates by the end of the year. Typically, rising interest rates lead to an improvement in banks' net interest margins (NIM), positively impacting their performance.