Net interest income on majority US banks drop on Q1

US mid-sized banks are expected to face pressured profits for most of 2024 due to rising deposit costs and slower loan growth.

Regions Financial, Huntington Bancshares, and Fifth Third Bancorp posted lower first-quarter profits due to a sharp decline in interest income.

For the second consecutive quarter, net interest margins reduced for all regional institutions.

The majority of mid-sized US banks anticipate a drop in net interest income (NII) this year as higher interest rates have hindered loan activity and increased deposit expenses have resulted from efforts to keep customers from seeking better returns elsewhere.

Fitch Ratings senior director Theresa Paiz-Fredel believes the broader higher-for-longer rate environment will continue to challenge net interest income for regional banks, with some institutions facing declines due to higher funding costs or changes in deposit mix and pricing.

Inflation has increased concerns about borrowing costs remaining higher for an extended period, causing borrowers to become cautious and deterred from taking up long-term debt like home mortgages.


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