The bank holdings in the portfolio are gradually being thinned out. The 6 positions I bought in 2020 and in the wake of the Credit Suisse bankruptcy are gradually being reduced to 2.
In my opinion, most banks are in an exceptionally good position in the current interest rate cycle, as I expect possible new interest rate cuts and long-term profits and reliable payouts are often lagging behind. Since I have also been investing with a much greater affinity for dividends since last year, I am saying goodbye to stocks that are less reliable in terms of dividends and dividend growth.
On March 10 2023, Silicon Valley Bank collapsed due to a bank run. SVB held a large number of long-term bonds. The market value of these bonds decreased significantly throughout 2022 and into 2023 as the Federal Reserve raised interest rates to cope with the inflation, causing unrealized losses on the portfolio. Higher interest rates also raised borrowing costs throughout the economy and some SVB clients started pulling money out to meet their liquidity needs. To raise cash to pay withdrawals by its depositors, SVB was forced to sell securities with big losses. The announcement of these losses caused a bank run the next day. The same month, Silvergate Bank and Signature Bank also went bankrupt.
These bankruptcies caused an overselling of bank stocks. For example, ING Bank ($INGA) (-0,45%) dropped about 23% in value. ING had a strong balance sheet and did not own a significant amount of long-term bonds. ING made a lot of profit from the interest margin of the cash stored by its customers. As the ECB raised the interest rates and ING was not planning on raising the interest rates for its customers, I expected the profits to increase significantly. Therefore, I bought ING Bank in March 2023 a profited +42%.
After the crash, I also bought it without any in-depth analysis. Normally such purchases always go down the drain for me, but in this case it was worth it for once.
I think I will hold them for the long term now. The fundamentals look pretty good in my opinion. (I've had a look at them in the meantime.) I was also missing a European financial stock in my portfolio.
I took the same step today :) went without any problems. Sparkasse is just too high for me with the fees. Basically never had any contact with the advisors, probably won't be the case with ing either :)
Position thus closed after almost exactly one year.
Although the trend is still intact, the share is now moving into a territory from which there were technical setbacks in 2015 and most recently in 2018.
Should the price range between EUR 14.50 and EUR 16.70 be sustainably overcome, I would not rule out another entry at a later date.
