Interest rates

The company reported $4.74 billion in net revenue in the first quarter, down 7.3% from a year earlier but exceeding analysts' estimates of $4.71 billion.

JPMorgan Chase and Wells Fargo said the battle for deposits isn't over — a reality denting their ability to earn more interest income. Regional banks will likely report similar pains next week.

Citigroup's earnings topped analysts' estimates as corporations tapped markets for financing and consumers leaned on credit cards.

The company reported net interest income that slightly missed analyst estimates, a sign the benefit of higher interest rates may be waning amid pressure to pay out more to depositors. Costs rose on higher compensation and an FDIC assessment.

Some online banks that offer high-yield savings accounts are making those products a little less high-yielding. Banks are also shortening the duration of new CDs, hoping that anticipated rate cuts by the Fed will enable them to start paying less to consumers.

Based on the pace of deals through late March, the banking industry is on track for the most branch sales since 2021. Buyer interest has mounted alongside the need to acquire deposits, following hits to funding bases last year.

With high deposit and borrowing costs persisting amid the Federal Reserve's campaign against inflation, lenders face stress on their net interest margins and the potential of troubled loans ticking up.

A key bank stock index ticked up after the Federal Reserve hinted that it could lower rates later this year. But there are still a number of economic uncertainties that are holding shareholders back.

Some 54% of small businesses said in a recent survey that elevated rates had led to higher debt payments. And in a sign that loan demand remains soft, 37% reported delaying expansion plans or capital spending.

Midsize lenders have largely defied the most dire predictions following Silicon Valley Bank's demise. But the nation's largest banks still have structural advantages, and the regionals remain hampered by their real-estate heavy portfolios and the continuing impact of high interest rates.

Lenders collected an estimated $25 billion in additional interest income last year by raising the average margin on annual percentage rates, or the amount above the prime rate, according to the Consumer Financial Protection Bureau.

Just weeks ago, prospects seemed strong for bank stocks to regain ground after a volatile 2023. But renewed credit concerns stemming from issues at New York Community Bancorp, and the increasing odds that interest rates will remain high for months, have dampened that outlook.

Bankers during recent earnings reports predicted lower deposit costs as 2024 wears on. But with inflation still elevated and the jobs market strong, the Federal Reserve probably won't begin lowering rates — and thus easing the drag on lenders' profits — until May at the earliest.

Activity from the Bank Term Funding Program has spiked by roughly $50 billion since November, when its rate fell below the level where institutions could earn money by keeping reserves at the central bank.

Fourth-quarter net income at the Buffalo, New York, bank fell 37% because of higher funding costs and a special deposit insurance assessment. But lower interest rates and a stronger economy are expected to strengthen profits this year and into 2025, its CFO says.

The Minneapolis company's balance sheet is still feeling the weight of higher funding costs, but CEO Andrew Cecere gave several reasons why he anticipates revenue growth will begin to outpace noninterest expense growth and efficiency will improve after midyear.

The Seattle bank's stock price fell in 2023 amid concerns over rising interest rates and its concentration of multifamily loans. The buyer is FirstSun Capital Bancorp, which raised $175 million as part of the deal.

Personal spending chugged along in the fourth quarter, thanks to the resilient job market. But loan charge-offs rose, and higher interest rates suppressed loan demand, executives say.

Surging interest rates, recession threats and weaker stock valuations bogged down merger-and-acquisition activity last year. The 98 announced deals fell short of even 2020, when the pandemic briefly brought the economy to a standstill.

The megabank will report a hit to its earnings this Friday from what one analyst called an "accounting nuisance." The charge, which BofA will make up over time, is due to the bank's use of a Bloomberg-developed interest rate index that gained little traction.