U.S. Banks Brace for Interest Income Weakness Amid Upbeat Quarter

Comerica and Huntington Bancshares have lowered their interest income growth forecasts for 2023 due to faltering loan demand and rising deposit costs. While the Federal Reserve's tightening cycle boosted net interest income in Q2, high interest rates are causing some customers to reconsider taking loans and making big purchases. Lenders are also increasing deposit rates to prevent money from flowing into high-yielding alternatives, which will impact net interest income going forward. Regions Financial also reported increased deposit costs in Q2. Comerica and Huntington have revised their NII growth expectations, causing their stock prices to decline. The industry remains cautious due to uncertainties surrounding potential capital requirements and is holding off on buyback plans.