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Financial Services: Investment Services Competition Is Heating Up

The economy remains relatively strong, but we’re seeing pressure in funding costs, net interest margin growth, and credit costs.

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  • We assess the global financial-services sector as approximately fairly valued. It has recently traded at a market-cap-weighted price/fair value estimate ratio of 0.96--a 4% discount to what our analysts believe the sector is worth.
  • While the economy remains relatively strong, increased competition among banks shown in rising funding costs are slowing net interest margin growth, and uncertainty regarding credit costs is increasing.
  • There is a general easing of financial regulation in the United States, but signs of tightening in China, Australia, and Europe.
  • Strategic moves in the United States' investment services industry heated up in the third quarter.

Americas Financials Update
By Brett Horn, Eric Compton, Greggory Warren, and Michael Wong

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Michael Wong does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.