DBRS Morningstar: Steady Sailing as U.S. Banks Finish 2019 Strong, Despite NIM Compression

DBRS, Inc. (DBRS Morningstar) published a commentary highlighting the 4Q19 U.S. bank earnings results. DBRS Morningstar views 4Q19 as another solid quarter for U.S. banks and in line with our expectations. U.S. banks remain well positioned to weather a more adverse operating environment, considering their strong balance sheet fundamentals and solid earnings performance.

Key highlights include:

-- DBRS Morningstar views 4Q19 as another solid quarter for U.S. banks and in line with our expectations.
-- Net income at the median DBRS Morningstar-rated U.S. bank was down modestly compared to recent periods, but still represented a solid ROAA of 1.23%.
-- Given the stage of the credit cycle and slower growth outlook, positive ratings actions will likely be limited in 2020.

“In 4Q19, lower interest rates pressured net interest margins, but this was partially offset by modest loan growth and lower deposit rates. Loan growth was driven by the consumer side, as commercial loan growth was muted with macroeconomic uncertainty weighing on demand,” said Michael McTamney, Vice President.

This commentary is available at www.dbrs.com.

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