Bank Profitability Rebounds despite Compressed Interest Margins

Adam Byrdak and Rajdeep Sengupta

Economic Bulletin, 2021, issue November 17, 2021

Abstract: 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.

Keywords: Banking; Bank profitability (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2021
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