
US Banks Expect Extended High Interest Rates, Survey Reveals
In a recent survey conducted by IntraFi, bank executives from across the United States expressed a pessimistic economic outlook, primarily due to persistently high interest rates. The study included 600 participants, including CEOs and CFOs from various banking institutions.
Mark Jacobsen, CEO of IntraFi, indicated that nearly half of the respondents observed worsening economic conditions at their banks over the past year, while only 12% hold a positive view regarding improvements in the coming year. The executives anticipate that the Federal Reserve is unlikely to reduce interest rates until the latter half of 2024 or beyond.
Despite this grim perspective, credit quality within these banks appears stable. Most executives reported no significant rise in delinquencies or charge-offs in the third quarter compared to the second. However, some noted an uptick in delinquencies related to residential mortgages and challenges in office-focused commercial real estate.
In a surprising development, a proposal from federal regulators for roughly a 20% increase in capital requirements for large banks was received positively by the majority of survey participants. This adjustment is largely viewed as advantageous for regional and super-regional banks, while community banks may also benefit from the proposed changes.
Conversely, only 19% of respondents believe that fintech companies would be the main beneficiaries of this proposal. Bank trade associations have expressed concern that such a shift could result in business migrating toward lightly regulated nonbank entities.