Saturday, October 16, 2021
68.6 F
Fort Worth

Falling rates hit banks

🕐 1 min read

The nation’s biggest banks are starting to feel pressure from the Federal Reserve, which has started a campaign to lower interest rates to keep the U.S. economy afloat. While profits at JPMorgan Chase, Citigroup, Wells Fargo and Bank of America were generally higher this quarter, one place all four banks saw weakness was in their net interest margins. Net interest margin is the difference between how much it costs the bank to borrow money, and how much they charge to lend it out. It’s

effectively a bank’s profit margin on loans. At JPMorgan, the bank’s NIM fell from 2.56% in the first quarter 2019 to 2.41% in the third quarter. It’s at its lowest level since 2017. There were similar declines at the other big banks. The Fed’s rate cuts have lowered banks’ borrowing costs, but in turn banks have lowered their own rates to stay competitive. Since banks still have fixed costs like salaries and offices to pay for, lower rates can eat into their profit margins. With further rate cuts likely, profit margins at the big banks face even more pressure going forward.

Related Articles

Our Digital Sponsors

Latest Articles

Not ready to subscribe?

Try a few articles on us.

Enter your email address and we will give you access to three articles a month, to give us a try. You also get an opportunity to receive our newsletter with stories of the day.

Get our email updates

Stay up-to-date with the issues, companies and people that matter most to business in the Fort Worth.

  • Restaurants
  • Technology
  • and more!

FWBP Morning Brief

FWBP 5@5

Weekend Newsletter

  • Banking & Finance
  • Culture
  • Real Estate