Bank stocks have had a difficult time in 2022 despite a sudden change in tune by global central banks. The closely watched SPDR Bank ETF (KBE) has crashed by more than 20% this year in line with the performance of the S&P 500 index. Here are some of the worst bank stocks to buy in 2022.
Credit Suisse (NYSE: CS) is a leading Swiss bank that has become a shadow of its former self. The company has been caught in all types of scandals and lost billions of dollars in the past few years. It was caught in the Greensill scandal that saw it lose billions. Also, the company lost billions when Bill Hwang’s home office crashed.
Credit Suisse has also had a significant turnover of senior leaders, which is usually not a good sign. Now, the company hopes that a turnaround will help to save its franchise. Its turnaround strategy will be unveiled on October 27 when it publishes its quarterly results.
Credit Suisse stock price has dropped by 60% in the past 12 months and by 95% from the Global Financial Crisis of 2008. Unlike banks like UBS and Goldman Sachs, the bank has never recovered from the crisis. Therefore, there is a likelihood that the shares will continue falling in the coming months.
Moelis (NYSE: MC) is not a household name. It is a small investment bank that focuses on M&A and strategic advisory, capital structure, capital markets, and private funds advisory. The firm has a market cap of more than $2.5 billion.
Moelis stock price has crashed by more than 42% this year. Unfortunately, the situation will likely continue to worsen in the coming months because of the recent crash of deals. According to WSJ, M&A deals have crashed by 40% in the US and by 30% globally.
This crash has hurt all companies in the investment banking industry. However, boutique companies like Moelis and Evercore will be hurt the most since they don’t have a stake in industries like mortgages and personal lending.
Evercore (NYSE: EVR) is another bank stock to avoid in 2022. Like Moelis, Evercore is an investment bank that operates in industries like strategic advisory, restructuring, capital market advisory, and institutional equities.
Evercore stock price has crashed by more than 40% this year, giving it a market cap of over $3.2 billion. This drop is mostly because the company makes over 80% of its total revenue in M&A. In a recent note, analysts at UBS wrote that:
“Negative operating leverage is likely to persist given that EVR’s public revenue is down 40% Y/Y, compared to a 29% average decline across the boutiques.”