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Ken Leon: latest market views
CFRA Research
Summary
Ken Leon is Director of Research (equity research) at CFRA and a diversified bank analyst, who joined in 2003 after more than two decades in equity research at ABN Amro, Bear Stearns and Lehman Brothers.
Chorus has 9 views from Ken Leon across 2 episodes on Bloomberg Talks and Bloomberg Surveillance since October 12, 2026.
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Bank stocks have pulled back to more reasonable valuations, with opportunities in capital markets and investment banking.
Bank stocks have pulled back since they started correcting in mid-August, so valuations now look more reasonable than before. Leon sees opportunities tied to capital markets and investment banking. He frames the setup as high on both risk and reward and says the key question is whether banks can keep generating strong earnings in the third quarter and give directional fourth-quarter confidence.
“The bank stocks have pulled back. The valuations seem more reasonable than they did before they started to correct in the middle of August. We see opportunities clearly related to the capital markets and investment banking.”at 0:55
Bloomberg Talks: CFRA's Ken Leon Previews Big Bank Earnings ·
Large banks are shifting toward recurring fee income to stabilise earnings and lift valuation multiples.
Leon says banks are very conservative about the capital they put at risk on trading desks and in principal trading, including derivatives. He argues the strategic goal is durable, recurring fee income that produces stable earnings and drives higher earnings multiples, and he cites Goldman Sachs and JPMorgan as examples of this model.
“Banks generally are very conservative in terms of this area. What they are striving to do is give durable, recurring fee income that generates stable earnings and drives higher earnings multiples.”at 2:08
Bloomberg Talks: CFRA's Ken Leon Previews Big Bank Earnings ·
Large banks should show no significant credit-quality deterioration in the third quarter.
Leon says he is seeing no significant increase in loan loss provisions across banks. He does not see a credit-quality risk for the large banks in the third quarter. He puts the main near-term concern on deposit pricing, not on loan losses.
“We're seeing clearly no significant increases of loan loss provisions... I don't see a a risk, you know, for the large banks on credit quality in the third quarter.”at 3:23
Bloomberg Talks: CFRA's Ken Leon Previews Big Bank Earnings ·
Consumers are moving deposits to higher-yield options, pressuring banks to pay competitive rates.
Leon argues that consumers have become much smarter about chasing higher interest, and that phone apps let them move money even overnight, as some large banks already allow. He says the real question is whether banks can or will offer competitive rates. He also points to a shadow-bank market and AI-enabled startups, such as Stripe, Ramp and Plaid, as alternatives that can capture higher yields on deposits.
“The question whether banks can or will provide competitive rates because by just using your phone, you could be moving money even overnight as some of the large banks do.”at 3:34
Bloomberg Talks: CFRA's Ken Leon Previews Big Bank Earnings ·
AI-driven efficiency gains could let banks cut headcount, mainly in back-office roles.
Leon says banks have a possible chance to reduce headcount as they become more efficient. He breaks the bank into front, middle and back offices and says most of the AI-driven change is happening in the back office. He also says financial advisers are already using AI agents to understand clients' financial objectives and portfolios.
“The banks clearly have a chance possibly for headcount reductions as they get more efficient.”at 5:20
Bloomberg Talks: CFRA's Ken Leon Previews Big Bank Earnings ·
Bank stock valuations look more reasonable after the August pullback, with capital markets upside.
Leon says bank stocks have pulled back since they started correcting in mid-August, and their valuations now look more reasonable. He sees opportunities tied to capital markets and investment banking. He is focused on whether banks can keep generating strong earnings in the third quarter and give directionally good guidance for the fourth quarter, and he expresses confidence that they can keep delivering strong performance.
“Bank stocks have pulled back. The valuations seem more reasonable than they did before they started to correct in the middle of August. We see opportunities clearly related to the capital markets and investment banking.”at 9:28
Bloomberg Surveillance: Upward Pressure on Yields and Equities ·
Bank credit quality is neutral; no major loan-loss provision increases expected in Q3.
Leon says credit quality is in a neutral zone. Banks are not showing significant increases in loan-loss provisions, and he does not see a credit risk for the large banks in the third quarter. The issue he flags for banks is the deposit side (rates and deposit competition), not credit losses.
“we're in the kind of the neutral zone for credit quality... no significant increases of loan loss provisions... I don't see a risk, you know, for the large banks on credit while in the third quarter.”at 11:54
Bloomberg Surveillance: Upward Pressure on Yields and Equities ·
Fintech and AI-enabled startups are pressuring bank deposits as consumers chase higher rates.
Leon says consumers are getting smarter about chasing higher interest, and money can move overnight from a phone. Newer fintech and AI-enabled startups (he names Stripe, Ramp and Plan) give customers alternatives for capturing higher CD rates or moving money. This competition challenges banks' ability to offer competitive deposit rates and may affect their margins.
“There is competition... with AI capabilities, the agility of some of the new startups... like Stripe, Ramp, Plan. All these give you just great opportunities for capturing higher CD rates or just moving money around.”at 13:06
Bloomberg Surveillance: Upward Pressure on Yields and Equities ·
AI efficiency gains could let banks cut headcount, mostly in back-office roles.
Leon argues that banks can become more efficient, possibly reducing headcount. He breaks the bank into front, middle and back offices and says most of the change is happening in the back office. He also notes that AI agents are already being used by financial advisers to understand clients' objectives and portfolios.
“the banks have clearly have a chance possibly for headcount reductions as they get more efficient... A lot of this is happening more in the back office.”at 14:02
Bloomberg Surveillance: Upward Pressure on Yields and Equities ·
Shows
- Bloomberg Talks · 1 episode
- Bloomberg Surveillance · 1 episode
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