The second quarter saw a mixed but resilient performance for U.S. banks despite sustained headwinds. While earnings and revenues increased across the board, the impacts of higher underlying rates and potential credit risks were evident in tightening net interest margins and increasing loss provisions, especially allocations for CRE office exposure.
Going forward, banks’ performance will hinge on their management’s ability to navigate credit risks and sustain growth in whatever macroeconomic environment unfolds amidst festering political and economic uncertainty. The response of central bankers and government officials to economic indicators such as inflation, employment, as well as consumer spending and sentiment, particularly the Federal Open Market Committee’s interest rate policy and regulatory capital requirements.
