With rates so low — after steep emergency Federal Reserve cuts in response to the pandemic’s fallout — banks will struggle to generate bread-and-butter interest income and asset-sensitive lenders will face substantial net interest margin contraction this year and next, analysts say.
Bankers will be pressed on upcoming earnings calls to forecast how the coronavirus pandemic — and the government's response — will shape credit quality, margins and fee income.
The Fed’s decision to cut its benchmark interest rate amid growing coronavirus concerns is bound to have an impact on banks, but just how broad and how deep remains to be seen.