Interest rates

Longtime customers of Capital One's online banking arm thought they were getting the best possible rate, according to a lawsuit. Little did they realize, they say, that they needed to open a new account in order to benefit from interest rate increases.

Many banks tapped the brakes on mergers and acquisitions this year amid economic and regulatory challenges. But executives at banks with a history of dealmaking say conditions could be right for them to return to buying mode next year.

Banking executives anticipate that loan demand will remain muted over the next 12 months, according to a new survey by the financial services firm IntraFi. That finding lines up with bankers' expectation that rates won't start declining until at least the second half of 2024.

Speaking on a panel at the Future Investment Initiative summit in Riyadh, Saudi Arabia, the JPMorgan Chase chief voiced doubts that central banks and governments around the world could manage the economic fallout from rising inflation and slowing global growth.

The movement of cash to money market funds from bank accounts will diminish lenders' ability to finance small and midsize firms, BlackRock Investment Institute said in a new paper. BlackRock and other money managers have spent much of this year readying to fill that void.

The second-largest U.S. bank says net interest income, a key source of revenue for the bank, rose 4.5% to $14.4 billion in the third quarter.

The Westlake, Texas, firm said deposits fell 28% to $284.4 billion in the third quarter from the year prior, beating the $268.8 billion average estimate of analysts surveyed by Bloomberg.

The simple act of disclosing their sensitivity to interest rate changes would bring market discipline to the banking industry's choices about interest rate risk.

Net interest income rose sharply at Wells Fargo and especially JPMorgan Chase last quarter, thanks to lighter-than-expected deposit costs. But questions linger about how long both companies can keep a lid on those expenses and whether smaller competitors can do the same.

Other banks likely will follow the lead of the Richmond, Virginia, company and tap the equity in their branch networks as alternative sources of capital grow more costly, experts say.

The Fed's meteoric increase in the federal funds rate over the last 18 months has left banks holding billions in unproductive investment securities. Helping them would be good for the economy.

Credit cards and auto loans both showed weakness in the second quarter, leading to an uptick in delinquencies and charge-offs for U.S. credit unions.

The Consumer Financial Protection Bureau issued a mortgage report based on statistics from 2022 and is looking for ways to simplify the refinance process while considering changes to mortgage servicing standards.

The JPMorgan Chase CEO's comments contrast with the consensus view after 5.25 percentage points of hikes that lifted the benchmark rate to 5.5% — the highest level in 22 years. Money markets are pricing in cuts from next year.

A Piper Sandler poll found that 91% of respondents believe that either a mild or severe recession is already reflected in banks' shares. The survey also unveiled that market participants remain concerned mostly about credit quality and aftershocks from surging interest rates.

The Federal Reserve's rate hikes so far are just "catching up," the JPMorgan chairman and CEO says. Dimon predicts inflation will be at 4% early next year and "won't be coming down for a whole bunch of reasons."

Concerns about large unrealized losses on bond investments have receded since the spring banking crisis, but the paper losses have started growing again in recent months. The worries today are less about banks' survival — and more about how much their margins will get squeezed.

When the prices of U.S. goods and services soar, the Federal Reserve tends to raise its benchmark interest rate, and commercial banks are pinched in several fundamental parts of their business.

Consumer loan balances fell in July for the first time since 2020 as banks have tightened lending standards in response to rising rates and jettisoned assets to bolster liquidity and capital levels.

Community bankers anticipate that interest rates could soon level off and the broader economy may avert a downturn as a result. If that forecast proves true, lenders could minimize credit losses and enjoy stronger loan demand than they had expected earlier in the year.