Posted on 04/17/2024 7:36:41 AM PDT by EBH
U.S. Bancorp (USB.N), opens new tab cut its forecast for full-year interest income and reported a 22% fall in first-quarter profit on Wednesday, as higher deposit costs and a larger corpus of rainy-day funds to cover potential defaults continue to weigh on the sector.
Shares of U.S. Bancorp fell 4% in morning trading. It was among the top losers on the broader regional banking index (.KRX), opens new tab.
Lenders in the U.S. have been offering higher interest rates in recent months to retain deposits as customers are increasingly seeking better returns by placing their money in higher-yielding alternatives.
U.S. Bancorp now expects net interest income (NII), the difference between what banks pay customers on deposits and earn as interest on loans, between $16.1 billion and $16.4 billion for the full year compared to the over $16.6 billion it had expected earlier.
"The reduction in guidance is disappointing," analysts at HSBC said in a note, adding the bank had recently reiterated the forecast at investor conferences.
(Excerpt) Read more at reuters.com ...
Yeah, like that's just not working for the banks
Citizens Financial profit slips on weaker interest income
Citizens Financial (CFG.N), opens new tab on Wednesday reported a lower first-quarter profit as it earned less from customer interest payments.
Banks in the United States have been bracing for a turnaround in gains from interest income, as they paid more to retain customers who are in search of higher-yield securities, while loan growth declines.
Citizens Financial’s net interest income (NII) - the difference between what it earns on loans and pays for deposits - tumbled 12% to $1.44 billion in the first quarter compared with the previous year
Larger rivals Bank of America (BAC.N), opens new tab and Wells Fargo (WFC.N), opens new tab also posted similar declines in NII in recent days.
Period-end loans and leases fell 7% to $143 billion in the quarter ended March from a year ago.
Worth highlighting...a in case you missed it...
Larger rivals Bank of America (BAC.N), opens new tab and Wells Fargo (WFC.N), opens new tab also posted similar declines in NII in recent days.
And USB is one of the more conservative, risk wise, banks out there
I used to work for them decades ago. Started with them when they were Star Bank, then Firstar, then USB.
I still have a HELOC with them.
PNC profit falls 21% amid weaker interest income
https://www.reuters.com/business/finance/pnc-profit-falls-21-amid-weaker-interest-income-2024-04-16/
PNC Financial Services (PNC.N), opens new tab reported a 21% fall in first-quarter profit on Tuesday, hurt by lower interest income as the lender paid more to hold customer deposits in a high interest rate environment.
The bank also forecast net interest income (NII) will decline about 1% in the current quarter, compared with the first quarter.
Net income fell to $1.34 billion, or $3.10 per diluted share, for the three months ended March 31, compared with $1.69 billion, or $3.98 per share, in the year-ago period.
Until very recently local banks in Downeast Maine were paying .02% interest on savings and money market accounts.
Charles Schwab, T. Rowe Price etc. have been 5%. Most of the local banks have started to pay more competitive rates.
And note .02% is Not 2%. it is (2/100)*1 % or .02*.01 = 0.0002
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