Bankers Don't Foresee Full Economic Recovery Until 2022 or Later

ARLINGTON, Va., Feb. 18, 2021 /PRNewswire/ -- Despite some improvements in outlook, banks remain skeptical that an economic recovery will take full effect in 2021, according to a new survey conducted by IntraFi Network (formerly Promontory Interfinancial Network).

Two-thirds of the nearly 500 bank leaders who responded to the fourth quarter survey said the economy will not recover until 2022 or later. Almost a quarter of bankers said it will be at least 2023 before the economy returns to pre-pandemic level.

"Despite multiple promising vaccines at various stages of being administered, it's clear bankers believe we still have a long way to go," said Mark Jacobsen, CEO and Cofounder of IntraFi Network. "It remains a challenging time for banks. Even though they are flush with liquidity, they face an uncertain credit environment and low loan demand."

The survey also provided insights into where bankers believe the Biden administration will focus its attention when it comes to financial services issues. Forty-two percent expect the Biden administration will be most active in pursuing extensions and loan forgiveness related to the Payment Protection Program. Nearly half of respondents also said that making changes to the pandemic-era program was where the new administration would be most successful. Sixteen percent said President Biden would likely succeed in passing legislation to help banks assist marijuana-related businesses. Thirteen percent predicted the administration would enact housing finance reform changes, while the same proportion anticipated it would successfully enact policy changes to the Community Reinvestment Act.

Many bank leaders expect the Biden administration to encourage a more active Consumer Financial Protection Bureau. Thirty-one percent of respondents said new leadership at the CFPB will prioritize mortgage lending and servicing, with 20% saying the agency will focus on data privacy. Overdraft protections and debt collection were cited as the top agency priority by 19% of respondents.

While some employers are considering whether or not they will require employees to get a COVID-19 vaccine before returning to work, bank leaders are decidedly opposed to such a mandate. More than nine in ten (92%) said their bank will not require employees to get a COVID-19 vaccination before returning to the office.

Other Highlights

• Funding Costs — Nearly half of respondents said they expect their funding costs to stay the same in the 12 months ahead, while 37% expect such costs to decrease.

• Deposit Competition — Slightly less than half 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%.

• Access to Capital — A majority of bankers (70%) said they believe their access to capital will remain the same in the 12 months ahead, down five points from the previous quarter.

To read the report in its entirety, please visit our new website.

About IntraFi Network

Chosen by thousands of banks since its founding (as Promontory Interfinancial Network) nearly two decades ago, IntraFi Network has assembled the nation's largest bank deposit network of its kind. Its solutions connect financial institutions of all sizes to help each build stronger relationships with its customers, diversify funding, seamlessly manage liquidity needs, and earn fee income. As the nation's #1 provider of reciprocal deposits and a leading provider of overnight and term funding options, IntraFi Network has the scale to be a strategic partner for even the largest bank's funding and capital management needs, or for the smallest.

SOURCE IntraFi Network

Related Links

https://www.intrafi.com