Bank executives are less pessimistic about the economy and the outlook for their institutions. Although they have concerns on the regulatory front and about the competitive market for deposits, the number of bankers who expect loan demand to improve and funding costs to drop increased significantly in this survey. Additionally, the percentage of bankers who think economic conditions for their bank will improve in the coming year more than doubled since last quarter.
Interestingly, there was a notable difference in bankers’ views on the largest threats to their institution versus their biggest concern for the industry overall. When asked about their own bank, 42% of executives said margin compression was the biggest worry. Only 8% cited concerns about credit quality at their own bank.
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