Fed Rate Hike Increases Deposit Costs, Squeezing Bank Margins
- Reports
- 2
- Developments
- 2
- Repetition
- 50%
New informationRepeats or wire copies
What happened
After the Federal Reserve delivered its first interest rate hike since 2023, banks are reporting increased deposit costs and tighter loan pricing. Huntington Bancshares Incorporated lowered its 2027 EPS guidance to the range of $1.75-$1.83 and reduced its 2026 net interest income growth projection to roughly 35%. This pressure caused Huntington Bancshares Incorporated shares to drop 5.55%.
From insidermonkey.com
Why it matters
While rate increases eventually boost asset yields, banks must immediately offer higher deposit yields to retain customer balances, which squeezes net interest margins in the near term. The Federal Reserve's action makes the operating environment more unfavorable for financial institutions in the short term.
The market performance of major financial institutions is influenced by Federal Reserve rate decisions and the banking sector's net interest margin.
From insidermonkey.com
Who's involved
- FEDThe central bank that implemented the interest rate hike.
- Wells FargoAn American multinational banking and financial services company affected by rate decisions.
- JPMorgan ChaseAn American multinational banking and financial services holding company competing in the market.
- Morgan StanleyA U.S. investment bank exposed to systemic margin pressure.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- JPMorgan ChaseSpeculative
JPMorgan Chase might see its core profitability impacted as increased deposit costs squeeze net interest margins.
- Morgan StanleySpeculative
Morgan Stanley could face systemic margin pressure as a major competitor in the financial services sector.
How it developed
Newest first. Tap a step to see who reported it.- Major financial institutions are warning of increased deposit costs and charge-offs following the recent FED rate hike.Sub-event
Fed rate hike leads to increased deposit costs for banks like Wells Fargo.1 source
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The entities involved
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FED
business
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Wells Fargo
American multinational banking and financial services company
Related events
- Fed rate hikes are impacting investment banking, lending business, and funding costs, as discussed by Gerard Cassidy on CNBC.
- Bill Campbell and Moran discussed the implications of a potential Fed rate hike on borrowing costs and market selloffs.
- Fed rate hikes are putting upward pressure on savings rates, with Goldman Sachs managing the Apple Card Savings account.
- Growing prospects of a Federal Reserve rate hike are being discussed, driven by the strength of the dollar index.
- Fed policy influences bank deposit rates, affecting entities including Capital One, FED, and Synchrony Financial.