US Companies are contributing to record bank margins

Recently published data from the FDIC (Federal Deposit Insurance Corporation) shows that US banks are benefiting strongly from recent interest rate rises and not passing on the benefits to their customers.

FDIC says in The Third Quarter Report: “The net interest margin (NIM) increased 35 basis points from a quarter ago and 58 basis points from the year-ago quarter to 3.14 percent. The quarter-over-quarter and year-over-year growth were the largest reported increases in the history of the QBP. ” (Quarterly Banking Profile)

With further interest rate rises in Q4 this trend has continued and we look forward to seeing the impact in the data which will be next published in February 2023.

Corporate Benchmarks from Bankhawk show that the return on company funds in US banks is not climbing as fast as the increases in the Fed rate and market interest rates would suggest.

Companies should carry out a review of their banking arrangements to determine if their own net interest margin has slipped. By benchmarking the net interest margin they can easily see the additional value that can be generated. Bankhawk’s experience is that companies can improve profitability without having to make significant changes to their banking relationships.