This bank has been downgraded by Barclays.Here’s what this means

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What does this mean for you?

Ally Financial is one of the nation’s largest banks with nearly $200 billion in assets and over 11 million customers. Ally is known for excellent customer service, low fees, and hassle-free banking. But Barclays’ recent downgrade from ‘overweight’ to ‘equal weight’ has taken a hit to its reputation. On top of that, Bank of America (BofA) also rated Ally down two notches from her to “Underperform.” So what does this mean for consumers? Here’s why Barclays downgraded Ally and how this will affect bank account holders.

What caused the downgrade?

According to Barclays, the entire banking sector is expected to face an “economic slowdown and possible recession”. As a bank serving low-end consumers, Barclays sees a bleak future for banks like Ally. These consumers are the most vulnerable to high inflation, interest rates, and reduced stimulus.

Barclays lowered its price target on Ally from $40 to $33, and BofA further lowered it to $26. According to Bank of America analyst Brandon Berman, “Rising interest rates are pushing up funding costs while at the same time slowing loan demand.” , we believe we need to see evidence that credit quality is better than expected.”

Stock markets, including Ally Financial, have been volatile since the beginning of 2022. Over the past 12 months, Ally Financial’s share price hit a record high of $53.83 before falling 50% to a low of $22.34 in late December. With loan growth slowing and loan losses rising, Barclays believes banks have become even more vulnerable this year.

How will this affect your customers?

For existing Ally Financial customers, there should be no significant changes in customer service or product offerings. Upgrades and downgrades by equity analysts help give investors insight into a stock’s performance. The upgrade means analysts are optimistic about the stock’s outlook. A downgrade means that analysts are pessimistic about the stock’s outlook.

Rating downgrades typically occur in response to company news, expectations, earnings, and more. Rating downgrades and upgrades typically affect share prices in the short term. It doesn’t necessarily reflect just the health of the company, but it does indicate whether the current stock price is justified based on short-term fundamental and technical analysis. Shares fell 4% on the day Ally Financial was downgraded. Since then, however, the stock has risen 20%.

Ally Financial is insured by the FDIC for $250,000 per depositor and per account holding activity. Banks are unlikely to go bankrupt, but you can open an account with Allie at another bank or another ownership category to maximize your insurance coverage. Additionally, customers may want to look into other banks if they offer better products or rates than his Ally Financial.

Overall, the recent downgrades by Barclays may be of concern to some investors and customers alike, but will not necessarily have a negative impact on the banks themselves or their product offerings, at least in the short term. is not. That said, customers should remain vigilant and alert to potential changes. That way, you can get the most value out of your financial institution.