Commercial banks are facing strong headwinds to growing their business, even as they put their underwriting missteps behind them. A lack of lending and negative effects from regulation have put banks in a "revenue drought," says Lee Kyriacou, a partner at Novantas, a financial services consulting firm.
According to the Federal Deposit Insurance Corp.'s latest quarterly banking report, released on Tuesday, net interest income (the money banks earn primarily from lending) had its first year-over-year drop in 22 years, falling 3% in the first quarter of 2011. The FDIC attributed the downtrend to narrower net interest margins and weak growth in interest-earning assets. Battered by lower revenues from deposit account service charges and reduced trading income, banks also experienced a decline in noninterest income, which fell by $2.2 billion, or 3.7%. In total, banks' first-quarter net operating revenue was off 3.2%.
http://www.cfo.com/article.cfm/14578393/c_14578920
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