By IntraFi Network
Despite some improvements in outlook, bank leaders continue to be wary about the prospects for an economic recovery in 2021. Two-thirds stated the economy will not fully recover until at least 2022 or later—with 43% saying recovery will happen in 2022 and 23% indicating it will come after 2022.
These results were echoed by the survey’s quarterly question on overall economic conditions. More than half (55%) of respondents reported overall economic conditions for their bank had worsened from 12 months prior, although this was a 10-point improvement from the 3rd quarter. Twenty-four percent indicated that economic conditions had improved over the prior 12 months, while 21% believed conditions remained the same.
Looking to the future, the percentage of respondents that expected overall economic conditions to improve in the 12 months ahead rose 12 points to 38%. Nearly three in 10 anticipated conditions to be worse for the 12 months ahead, while 33% predicted conditions would remain steady. The recent rollout of COVID-19 vaccines has been heralded by some as the first step to ending the pandemic. We asked bank leaders their thoughts on vaccinations for employees.
More than nine in 10 (92%) said their bank will not require employees to get a COVID-19 vaccination before returning to the office. With a new president in office, we surveyed bank leaders on how the Biden administration’s policies might affect their banks. When it comes to legislation that impacts banks, 42% expected the Biden administration to be most active on Paycheck Protection Program (PPP) extensions and forgiveness. PPP relief was also the policy area where bankers thought the new administration would be most successful (48%).
Sixteen percent said President Biden would likely succeed in passing legislation to help banks assist marijuana-related businesses. Thirteen percent predicted the administration would successfully enact housing finance reform changes, while the same proportion anticipated it would successfully enact policy changes to the Community Reinvestment Act.
On the regulatory front, 57% expected the Biden administration to be most active on COVID-19 relief, while thirty-one percent chose consumer protection. Thirty-one percent expected a Biden administration’s Consumer Financial Protection Bureau (CFPB) to emphasize protections on mortgage lending or servicing, with data privacy ranking second (20%), and overdraft protections and debt collection tying for third among respondents with 19% each.
OTHER HIGHLIGHTS
» Funding Costs. Nearly half of respondents (48%) said they expect their funding costs to stay the same in the 12 months ahead, while 37% expected the costs to decrease. Fifteen percent predicted an increase in costs, 11 points higher than the third quarter.
» Deposit Competition. Slightly less than half (48%) predicted deposit competition would remain the same in 12 months, with 20% expecting a decrease and 32% expecting an increase.
» Loan Demand. The percentage of respondents that anticipated loan demand to improve in the next 12 months rose 2 points from the third quarter to 47%. Twenty-eight percent of those surveyed predicted it would remain the same over that time period, and 25% believed it would decrease. Both figures are within one point of the previous quarter.
» Access to Capital. While a majority of bankers (70%) still believed their access to capital would remain the same in the 12 months ahead, that figure is down five points from the previous quarter. Twenty-one percent expected it to increase, and 8% said it would decrease.
Read the report in its entirety, here.
