The Cost of Deposits: Banks' Profit Outlook Under Pressure

US banks are facing higher funding costs as they compete to keep or attract depositors, with bank deposit rates reaching their highest level in over a decade. These increased costs are eating into banks' net interest margin, a key measure of profitability. As a result, some mid-sized regional banks may see a drag on their second-quarter results and lower earnings estimates for the rest of the year. The first set of second-quarter earnings from major US banks, including JPMorgan Chase, Citigroup, Wells Fargo, and State Street, will be closely watched by investors. Additionally, banks heavily reliant on investment banking, such as Goldman Sachs, may face challenges due to a recent decline in deal making.