Why did S&P downgrade the ratings of these five banks? We took a closer look at the financial details

Net Interest Margin: Net interest margin is a measure of the difference between interest paid and interest received, adjusted for the total amount of interest-generating assets the bank holds. Due to rising costs of deposits, the net interest margin of the banks that S&P downgraded has been shrinking since 4Q 2022. KeyCorp's 2Q 2023 NIM was 2.10%, the lowest among these banks.

ROE: The decline in bank ROE comprehensively reflects the decrease in bank net interest income, the slowdown in loan growth, and the increase in costs, etc. Associated Bank-Corp's latest reading was 7.64%, the lowest in these five banks.

Efficiency Ratio: For banks, the efficiency ratio is non-interest expenses/revenue. The rising efficiency ratio reflects higher operation costs. KeyCorp's efficiency ratio reached 68.20%, the highest in the samples.

CET1 ratio: All these five banks' capital ratios are lower than the pre-pandemic era. Among them, Associated Bank-Corp's CET1 ratio was 9.35% in 2ndquarter, lower than other banks.

Total Deposits Growth Rate: The growth rate of deposits inflow of these five banks declined since 2022. KeyCorp's deposits decreased by 13.12% in 2Q 2023, the lowest among these banks.

NPL Ratio: A nonperforming loan (NPL) is a loan in which the borrower is in default and hasn't made any scheduled payments of principal or interest for a certain period of time. Valley National Bank's NPL ratio reached 0.60%, the highest among these banks.