The news: After a turbulent Q1, banks are preparing to release their earnings starting this week. While major US banks were generally shielded from the runs that regional banks faced, many other economic factors are influencing earnings. Here's what we expect to see.
Net interest income will be a bright spot, but will experience some pressure.
- High interest rates on loans means banks will continue to rake in interest income. And even though many larger US banks experienced an inflow of deposits during the March banking crisis, their reluctance to boost rates on savings accounts means they didn't pay much on the deposits. Interest earned will easily outweigh interest paid.
- But the questions around bank liquidity that are haunting the sector means many banks will likely implement some additional liquidity measures that will put pressure on their net interest income.
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