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US bank stocks sink after New York Community Bancorp cuts dividend

January 31, 2024

Regional U.S. bank stocks sank on Wednesday, dragged by a 38% plunge in the shares of New York Community Bancorp (NYSE:NYCB) after it cut its dividend and posted a surprise loss, renewing fears over the health of similar lenders.

The KBW Regional Banking Index closed down 6%, its biggest one-day drop since March 13 last year after New York’s Signature Bank (OTC:SBNY) collapsed amid depositor panic sparked by the failure days earlier of Silicon Valley Bank.

Deposits have since stabilized, but some investors said Wednesday’s sell-off highlighted ongoing concerns over regional lenders’ health, including that the cost of retaining deposits would squeeze net interest income (NII) which drives lending profits.