Journal Article
Bank Profitability Rebounds despite Compressed Interest Margins
Sengupta, Rajdeep; Byrdak, Adam (2021-11-17)
While traditional sources of U.S. bank revenues have struggled during the pandemic, overall bank profitability has soared. This unusual deviation is largely explained by a substantial decline in banks’ loan loss provisions. Extraordinary policy measures undertaken by the Federal Reserve and U.S. Treasury aided a rebound in financial market conditions and, in turn, reduced projected loan losses. However, this effect is likely to be transitory, suggesting an uncertain future for bank profitability.
Economic Bulletin , Issue November 17, 2021