The Hamilton Financial Index
By Matt McDonald, mmcdonald@hamiltonps.com, 202-822-1205
Read the full report here.
The Hamilton Financial Index (HFI) combines both financial stress, represented by the St. Louis Financial Stress Index, and industry-level capitalization, represented by the Tier One Common Capital ratio, to provide a clear snapshot of the safety and soundness of the financial services sector. The key findings are:
- Currently, the HFI shows that financial institutions are significantly safer today with a score of 1.28, 28 percent higher than historical norms.
- The rise in the HFI reflects growth in capital. If capital levels remained at pre- crisis levels, the HFI would be below pre-crisis norms with a reading of 0.95.
- U.S. banks Tier One Common Capital ratio is 12.6 percent, a year-over-year increase of 1.3 percent.
- U.S. banks Tier One Common Capital increased to $1.13 trillion.
- The ratio of Risk-Weighted Assets to Total Assets fell 1.3 percent year-over-year.
- Financial stress declined in the fourth quarter of 2012.
