Bankers hoped the tax overhaul would stimulate a boom in business borrowing, but several said this week that hasn’t happened yet. PNC’s Bill Demchak warned that the tax cuts could be encouraging lenders to underprice loans.
Bank stocks tumbled on Monday amid a wider sell-off as investors' concerns mounted that wage growth could lead to inflation, higher borrowing costs for businesses and a slowdown in Fed rate hikes.
Swelling capital levels, tax cuts and changing attitudes about post-crisis regulation could encourage bigger banks to issue the one-time payouts to reward shareholders and better manage their returns.
Look for banks to boost dividend payouts, expand into new markets, increase their tech spending and, eventually, ramp up their C&I lending. But don't expect much in the way of M&A.
Though business owners are more optimistic about the direction of the economy since the tax law was passed, it's doubtful their borrowing will increase meaningfully until they see more signs of more robust growth, bankers say.
The payments resolve a number of cases that date back to 2011 and were among the largest coordinated U.S. enforcement efforts in the years following the crisis.
The Pittsburgh company got the tax-related boost from an increase in the valuation of its deferred tax liabilities. It was partly offset by several charges.
Capital One became the latest bank to feel customers' online wrath last week after reports that some customers were being charged twice for debit card activity. But they were hardly alone.
