Expectations for Improvement for Economic Conditions Hits Low Among Bank Executives According to Latest Bank Executive Business Outlook Survey From Promontory Interfinancial Network
Arlington, VA (Sept. 28, 2017) – Bankers have low expectations for improvement of overall economic conditions over the next 12 months, according to the latest quarterly Bank Executive Business Outlook Survey, conducted by Promontory Interfinancial Network. The downward slide began in the first quarter of 2017; banker confidence that overall economic conditions for their banks would improve dropped from 62.3% to 46.4% and fell even further to 41.2% this quarter.
Meanwhile, the banking sector has become increasingly circumspect about prospects for legislative and regulatory change coming from Washington, DC, or anywhere else for that matter. That’s the sentiment of bank CEOs, presidents, and CFOs across the nation, according to the results of the survey.
The survey also revealed a record low level of confidence across four key factors for the banking industry. For only the second time since the Bank Executive Business Outlook Survey was launched over two years ago, the Banker Confidence IndexSM has entered into negative territory. The Index, which tracks banker expectations in four key areas (access to capital, loan demand, funding costs, and deposit competition) slipped to 47.6 this quarter, versus 50.4 in the first quarter of 2017, the lowest level since the survey’s inception. (Charted on a scale of 0-100, a score over 50 can be read as expansionary. A result below 50 can be read as contractionary.)
Mark Jacobsen, President & CEO of Promontory Interfinancial Network, noted, “The drop in the Index certainly gives one pause. Whether this is the new normal or an anomaly remains to be seen.”
In addition to the core tracking questions, this quarter’s survey also included supplemental questions on possible regulatory and legislative changes and the economy. Bank respondents, by a large margin, believe the current regulatory environment is an impediment to lending. Yet generally, banks were neutral, or only cautiously confident, when asked if they believed leadership changes at the top positions at regulatory agencies would improve the lending environment.
And despite the desire for regulatory relief, bank respondents indicated that failure to enact corporate tax reform was a bigger threat to the nation’s economic well-being than passage of regulatory relief legislation, the debt ceiling, or a federal budget to keep the government open.
For more information, please download the quarterly Bank Executive Business Outlook report.
About the Survey
The Bank Executive Business Outlook Survey was completed online over the course of two weeks from July 24-August 3, 2017, by CEOs, presidents, or CFOs of 277 banks. Compared to the asset-size distribution of the banking industry, responses were slightly weighted toward banks with between $1 billion and $10 billion in assets.
About Promontory Interfinancial Network, LLC
Promontory Interfinancial Network was founded by leading figures in the banking industry—Eugene Ludwig, Alan Blinder, Mark Jacobsen, and Alfred Moses—to provide financial institutions with profit-enhancing solutions. The founders envisioned a network, composed of thousands of financial institutions, whose “synthetic size” would help each member institution to compete more efficiently. More than 3,000 financial institutions have chosen to be a part of the company’s Network. Network members use Promontory Interfinancial Network’s balance sheet and liquidity management services to acquire and retain large-dollar customer relationships, purchase funding, manage liquidity, reduce collateralization costs, and buy and sell bank assets.