In the Midst of Ongoing Fluctuating Interest Rates, Bank Activity is Steady, Says New Report3/8/2023 ![]() The status of the nation’s banks remains healthy, according to a new report, despite the vagaries of the national economy. In its Monetary Policy Report just submitted to Congress, the Board of Governors of the Federal Reserve System said that even though 2022 saw a decrease in overall revenue growth, the nation’s banking sector is still strong. “Bank profitability in the second half of 2022 remained robust overall, driven by strong net interest income,” said the document, before adding, “but revenues and earnings in the fourth quarter were generally weaker, particularly among banks with a greater share of income derived from investment banking activities.” The report additionally noted that interest rates on both auto loans and credit cards continued to increase throughout most of last year. Those rates, in fact, are “now higher than the levels observed in 2018 at the peak of the previous monetary policy tightening cycle.” This comes as banks across the country have reported tighter lending standards regarding consumer credit products during the final six months of last year. Those tightened standards, says the report, to some degree reflect “increases in delinquency rates and concerns about further future deterioration in credit performance.” In fact, after falling to record lows in 2021, the second year of the pandemic economy, delinquency rates for auto loans and credit cards were back on the upside last year. Even in the face of those increased rates, “financing has been generally available to support consumer spending, and consumer credit continued to expand in the past several months.” The Monetary Policy Report is sent to Congress twice a year by the Fed, and is regarded as a holistic overview of the U.S. economy and the country’s financial welfare. By Garry Boulard
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