Net Interest Margin Trends and Expectations
Much has transpired since Bank Watch’s last review of net interest margin (“NIM”) trends in May 2019. The emergence of COVID-19 in early 2020 resulted in economic shutdowns that led to emergency rate cuts from the Federal Reserve and unprecedented monetary and fiscal stimulus. While the economic recession that followed COVID-19 proved to be short-lived, low rates and excess liquidity lingering in the system have weighed on margins.
As 2022 gets underway, the industry is hopeful that rate increases and loan growth, stemming from continued economic recovery, will deliver a boost to margins. This potential inflection point provides a good opportunity to review recent margin trends and examine how banks may be impacted by rising rates this year.
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