Morgan Stanley’s Best Overweight & Quality Stocks: Top 25 Stocks

18. M&T Bank Corporation (NYSE:MTB)

Number of Hedge Fund Holders In Q2 2024: 34

Average Analyst EPS % Revision: -0.3%

M&T Bank Corporation (NYSE:MTB) is a New York based regional bank. It is one of the biggest regional banks in the US, as evidenced by a sizeable asset base of $208 billion by the close of 2023. Just like other banks have, M&T Bank Corporation (NYSE:MTB) has also benefited from high interest rates as they have allowed it to grow its revenues. Between 2020 to 2023, the bank’s revenue grew by 57% as it jumped from $5.9 billion to $9.3 billion. However, there is some exposure in M&T Bank Corporation (NYSE:MTB)’s portfolio to the troubled commercial real estate sector. Work at home from trends coupled with high rates have led to sizeable defaults in this sector, and as of Q2 2024, M&T Bank Corporation (NYSE:MTB) had $31.5 billion in commercial real estate loans. Consequently, if macroeconomic data disappoints, then the shares could be stressed as corporate income statements are stressed during such times. On the flip side, reductions in interest rates will prove beneficial as they reduce the M&T Bank Corporation (NYSE:MTB)’s interest expense.

M&T Bank Corporation (NYSE:MTB)’s management commented on its interest expense and interest rates during the Q2 2024 earnings call:

“Higher for longer rates in the first half of the year allowed us to take additional actions to protect NII from lower interest rate environment.

For example, in the first half of the year, we shifted $3 billion of cash into securities and added $5 billion in forward starting cash flow hedges, which became active in 2025. During — or further, we expect that the downside in interest-bearing deposit beta will be approximately 30% to 40% in the first couple of rate cuts.”