Regional Banks Have Begun to Adjust Their Second-Quarter Guidance
The second quarter of the year was always going to be difficult for most banks. That's because the banking crisis happened in March, toward the end of the first quarter, so its full effect hasn't really been seen yet in quarterly earnings reports.
Additionally, the banking crisis seemed to wake consumers and businesses up to the fact that they could be getting more yield on their money, and deposit competition and pricing have intensified. Now, banks have begun to adjust their second-quarter and full-year forecasts.
A major source of revenue for most banks is net interest income (NII), which is the money banks make on loans and securities after funding those assets with liabilities such as deposits. Because deposit competition and pricing have intensified and banks are pulling back on lending to preserve liquidity, this is going to hurt NII and bank margins. But it seems like many banks were caught off guard regarding just how severe conditions in Q2 would be.
Source Fool.com
