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US Bank Profits Decline Due To Increased One-Time Fees And Deposit Expenses

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On Thursday, a number of US banks released their fourth-quarter earnings results, which were severely impacted by lower interest revenue and expenses related to topping off a deposit insurance fund.

The industry’s net interest margins for banks that had previously profited from rate hikes by the U.S. Federal Reserve have contracted as a result of higher payouts on deposits made to keep consumers from pursuing high-yielding alternatives.

In the meanwhile, the majority of American banks pay a charge to the Federal Deposit Insurance Corporation (FDIC) in order to replenish its insurance fund, which protects client deposits in the event that a bank fails.

In an effort to assist bankers in responding to bank runs similar to the ones that destroyed three banks a year ago, a different top regulator on Thursday unveiled ideas for new short-term liquidity regulations.

The desire of borrowers is “muted,” KeyCorp CEO Chris Gorman said in a Reuters interview. “There is not a lot of loan demand, there are not a lot of transactions.”

Groups About Deposit Costs


Source- Bankrate

This quarter, investors are keeping a careful eye on developments in deposit costs in bank earnings reports. Analysts predict 2024 earnings per share at 11 U.S. regional banks will decline from a year earlier, primarily as a result of higher deposit costs, according to a Reuters story earlier this month.

“The results weren’t handled correctly. Deteriorating credit and ongoing pressure on net interest margins as a result of increased deposit costs and slow loan growth are the main themes. That explains the pressure you’re seeing on a few of those institutions right now,” Gabelli Funds portfolio manager Macrae Sykes stated.

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