The Rhode Island bank plans to build out its fee income capabilities, expand C&I lending in the Southeast, renegotiate vendor contracts and take other steps to produce expense cuts and revenue enhancements of at least $90 million.
The Cincinnati company reaped the benefit of the latest round of interest rate hikes, as a higher net interest margin and lower costs helped overcome the drop in lending.
In a sign of broader competition ahead, bigger banks are raising the interest they pay on deposits held by business customers. The big question is how hard will it be for banks to maintain margins and to stave off consumer demands for better rates.
Net interest margins are on the rise and banks have the green light to return more capital to shareholders, but commercial lending and consumer credit quality remain trouble spots.
Even with net interest margins improving, banks are reluctant to raise rates on deposits until more floating-rate loans reprice. But how long can they wait before depositors start demanding higher yields?
Executives at BB&T, KeyCorp and Citizens are milking commercial lending niches and balancing cost control with new investments while waiting for more rate hikes to fatten margins.
