U.S. Banks Start 2025 on Solid Footing Despite Increasing Uncertainty

The key word on many U.S. bank earnings calls was "uncertainty" as they grapple with the impact of rising and shifting tariffs on the U.S. economy and ultimately their customers. With that in mind, U.S. banks maintained or marginally increased the allowance for loan losses in Q1 2025.

Key Highlights
-- Despite a challenging operating environment in Q1 2025 and the shadow of economic uncertainty, U.S. banks performed well, consistent with our expectations.
-- Highlights for the quarter included generally improving net interest income and robust trading results for banks with significant trading businesses.
-- Most U.S. banks maintained their previous guidance for performance in 2025 while signaling results could come in at the lower end of ranges.

"With most U.S. banks building capital in 2024, we had previously expected capital management activities to accelerate in 2025," said John Mackerey, Senior Vice President, Sector Lead, North American Financial Institution Ratings. "However, given the increased uncertainty as well as the lack of clarity on any revision to capital requirements, we expect many banks will continue to retain capital at elevated levels."