SNL Financial said new research on the U.S. bank sector indicates that higher interest rates are not a panacea for bank profitability as competition and regulation are likely to limit the benefit of rate increases.
According to data compiled by SNL Financial, big settlements with regulators have faded further into memory, but the latest tally for credit crisis and mortgage related settlements now stands at $132.15 billion.
SNL reported that the banking industry showed Q1/15 growth in loans and profits but a “dismal” net interest margin.
SNL Financial reported that falling long-term interest rates in 2014 left many bank portfolio managers apprehensive about investing at such low yields.
In a news release, SNL Financial notes that toping $50 billion in assets can allow a bank to have greater reach and scale, but with it comes near-constant scrutiny from regulators and heightened costs.
According to the latest ranking by SNL Financial, JPMorgan, Bank of America, Citigroup and Wells Fargo remain the four largest banks in the U.S., while CIT Group is now #35 on the list after meeting SNL’s ranking criteria.
SNL reported that larger banks made considerable progress in moving toward compliance with the final Basel III rules, but smaller institutions only inched closer to meeting the capital requirements.
SNL Financial reported that banks are not out of the woods yet when it comes to pressure on their net interest margins. But the rate environment appears to be evolving in lenders’ favor, bankers and analysts say.