In a recent survey by IntraFi, bank executives across the United States revealed a gloomy economic forecast, largely attributed to persistently high interest rates. The study involved 600 participants including CEOs and CFOs from various banking institutions.
Mark Jacobsen, CEO of IntraFi, noted that almost half of the respondents reported deteriorating economic conditions at their banks over the past year. A mere 12% are optimistic about improvements in the upcoming year. The executives predict that the Federal Reserve will not lower rates until the second half of 2024 or later.
Despite this pessimistic outlook, credit quality in these banks remains stable. Most executives reported no increase in delinquencies or charge-offs in Q3 compared to Q2. However, some did highlight higher delinquencies on residential mortgages and problems arising in office-related commercial real estate.
In an unexpected turn, a federal regulators' proposal for an approximate 20% increase in capital requirements for large banks was viewed positively by the majority of respondents. This move is seen as mainly beneficial for regional and super-regional banks. Community banks also stand to gain from this proposed change.
On the other hand, only 19% of respondents believe that fintech companies would be the primary beneficiaries of this proposal. Bank trade groups have expressed concerns that this could lead to a shift in business towards lightly regulated nonbanks.
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