RBC's Gerard Cassidy talks Big Banks hitting record highs
December 24, 2025 • 4m 26s
Leslie Picker (Reporter)
00:00.350
let's
talk
more
about
the
bank
's
trade
let's
joining
me
now
is
gerard
cassidy
he
is
RBC
capital
markets
co
head
of
global
financials
gerard
good
to
see
you
today
it
really
feels
like
and
and
you
hear
this
on
pretty
much
every
earnings
call
over
the
past
few
quarters
that
things
Leslie Picker (Reporter)
00:15.950
are
really
firing
on
all
cylinders
for
the
big
banks
especially
what
do
you
think
is
the
biggest
risk
for
the
bull
case
in
minx
right
now
Gerard Cassidy (Co-Head of Global Financials)
00:25.150
thank
you
leslie
for
having
me
on
the
program
and
i
would
say
the
biggest
risk
for
the
banks
would
be
a
reemergence
of
inflation
in
the
second
half
of
twenty
twenty
six
if
we
see
inflation
running
at
four
or
five
percent
and
it
forces
the
federal
reserve
to
reverse
its
monetary
Gerard Cassidy (Co-Head of Global Financials)
00:46.360
policy
from
monetary
easing
and
lowering
short
term
rates
to
monetary
tightening
and
raising
short
term
rates
that
to
us
is
the
biggest
risk
to
the
bank
stocks
as
we
look
out
into
twenty
twenty
six
Leslie Picker (Reporter)
00:59.710
and
presumably
that's
because
of
the
risk
of
a
flatter
flatter
yield
curve
as
well
as
a
potential
headwind
for
credit
quality
is
that
right
how
are
you
thinking
about
credit
quality
particularly
as
we
think
about
the
interconnectivity
between
some
of
those
NDF
is
the
non
banking
Leslie Picker (Reporter)
01:15.630
sector
as
that
continues
to
become
even
more
interconnected
Gerard Cassidy (Co-Head of Global Financials)
01:20.550
leslie
you're
right
if
they
were
to
raise
short
term
interest
rates
that
would
certainly
flatten
the
yield
curve
and
would
take
away
the
benefit
of
growing
net
interest
income
and
the
bank
stocks
like
many
stocks
they
discount
the
future
so
what
investors
would
also
take
into
Gerard Cassidy (Co-Head of Global Financials)
01:37.110
account
is
rising
short
term
interest
rates
could
lead
to
a
recession
which
then
turns
into
a
credit
cycle
and
to
your
point
credit
today
is
very
resilient
the
de
risking
of
the
american
banking
industry
has
been
very
effective
post
the
financial
crisis
and
so
as
a
result
the
Gerard Cassidy (Co-Head of Global Financials)
01:55.710
banks
are
in
good
shape
now
as
you
said
on
the
interconnectedness
with
the
loans
the
non
depository
financial
institutions
and
DFI
as
you
referenced
right
now
they're
that's
very
healthy
and
the
banks
have
done
a
very
good
job
with
that
business
over
the
years
but
to
your
point
Gerard Cassidy (Co-Head of Global Financials)
02:13.350
it
has
grown
very
rapidly
the
growth
in
that
category
and
that
has
our
eyes
wide
open
to
maybe
potentially
problems
down
the
road
Leslie Picker (Reporter)
02:22.630
yeah
we
saw
little
bits
and
and
you
know
cockroaches
as
i
guess
jamie
dimon
called
them
back
a
couple
months
ago
with
regard
to
bankruptcies
and
you
know
spotlighting
NDF
is
i'm
curious
when
you
look
at
the
year
to
date
gains
in
some
of
these
bigger
banks
in
particular
they're
Leslie Picker (Reporter)
02:40.670
pretty
mind
boggling
when
you
think
about
it
is
there
room
to
run
how
much
of
all
of
these
tailwinds
are
already
priced
into
the
sector
right
now
Gerard Cassidy (Co-Head of Global Financials)
02:50.330
i
think
there's
some
but
to
your
point
leslie
about
cockroaches
or
mice
whatever
you
want
to
call
it
right
now
we
don't
see
that
at
all
and
maybe
down
the
road
but
coming
back
to
what's
priced
in
as
as
you
just
pointed
out
the
stocks
have
done
very
well
because
of
the
Gerard Cassidy (Co-Head of Global Financials)
03:08.830
expectation
of
what
you
highlighted
earlier
in
this
segment
and
what's
really
going
to
be
interesting
is
that
one
piece
of
bank
deregulation
and
it's
the
most
important
piece
known
as
basel
three
end
game
we
think
we'll
see
those
that
proposal
come
in
the
first
quarter
of
twenty
Gerard Cassidy (Co-Head of Global Financials)
03:27.470
twenty
six
and
this
will
give
a
further
pieces
of
evidence
to
investors
that
the
regulators
are
very
constructive
and
are
working
with
the
banking
industry
but
the
other
part
of
the
story
leslie
and
i
think
this
is
what's
going
to
carry
twenty
six
at
least
initially
is
the
Gerard Cassidy (Co-Head of Global Financials)
03:45.110
growth
of
the
economy
you
saw
the
real
GDP
numbers
this
week
now
if
you
take
the
nominal
GDP
so
that's
not
the
real
GDP
number
this
you
know
factors
in
inflation
of
course
real
GDP
when
you
look
at
the
nominal
number
the
growth
was
about
eight
percent
in
the
quarter
and
the
Gerard Cassidy (Co-Head of Global Financials)
04:02.750
reason
that's
important
is
that
loan
growth
when
you
go
back
over
seventy
five
years
and
do
a
regression
analysis
loan
growth
in
the
banking
industry
is
linked
to
nominal
GDP
growth
so
if
we
continue
to
see
three
to
four
percent
real
GDP
growth
and
possibly
seven
to
eight
Gerard Cassidy (Co-Head of Global Financials)
04:19.910
percent
nominal
growth
loan
growth
could
accelerate
which
is
not
really
discounted
in
the
prices
today
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