Banks have grown markedly more pessimistic about the economy in the wake of the spread of the novel coronavirus with a sizable number now concerned about access to capital during the coming year, according to Promontory Interfinancial Network’s latest survey of bank executives.
In a survey of bank CEOs, CFOs, and presidents from 515 unique banks across the country, bank leaders did see some positive signs, however. Funding costs decreased as banks witnessed a massive influx of deposits in the first quarter. Competition for deposits also declined as domestic deposits surged by more than $1 trillion during the first quarter.
The survey also details the significant actions banks have taken in response to the spread of COVID-19, including closing branches, requiring employees to work from home, and offering workout arrangements for customers. The survey is one of the first to detail how economic first responders are reacting to the crisis.
“In times of difficulty, banks are there for their customers—and the COVID crisis is showing that,” said Mark Jacobsen, CEO of Promontory Interfinancial Network. “Bankers have grown understandably more pessimistic about the economy in the past few months. But with deposits flooding into the system and funding pressures decreasing, they appear to be in excellent shape to provide assistance to borrowers.”
Promontory Interfinancial Network conducted the Q1 Bank Executive Business Outlook Survey from April 2 to April 15, 2020. Banking executives from 515 unique banks responded to the survey and represent more than 10 percent of the banks in the country. The full survey can be found here.
Following are survey highlights:
Promontory Interfinancial Network’s proprietary Bank Experience IndexSM (a composite measure of access to capital, loan demand, funding costs and deposit competition now compared to 12 months prior) hit 53.0 this quarter, an increase of 1.6 points from the previous quarter. Promontory Interfinancial Network’s proprietary Bank Confidence IndexSM (a composite measure of access to capital, loan demand, funding costs, and deposit competition for the 12 months ahead) measured 49.2, falling 3.7 points from the previous quarter. The biggest change came in respondents’ views of overall economic conditions.
This is the 21st survey published by Promontory Interfinancial Network with new data released every quarter. An archive of previous surveys can be found here.
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