Bank confidence has continued its year-long decline, and overall economic optimism is not high among bankers, according to a survey from Promontory Interfinancial Network.
The Bank Confidence Index is based on expectations for access to capital, loan demand, funding costs, and deposit competition 12 months ahead.
It reached its lowest point since the inception (43.0) by the end of 2018. Confidence declined in each quarter of the year and was not limited to any one region of the country.
Optimism about loan demand also steadily decreased over the course of the year, with only 39 percent of respondents expecting an increase in demand in the fourth quarter of 2018. That’s down 25 percentage points from the fourth quarter of 2017, when 64 percent of respondents expected it to grow.
Overall economic optimism also took a dip, although half of respondents think a recession will hold off til at least 2020. In Q4 2018, just 22 percent of bankers expected overall economic conditions to improve over the course of 2019.
This is the lowest level recorded since Promontory began tracking this indicator and represents a 43-percentage-point decrease from a year earlier. At the same time, the number of respondents expecting conditions to worsen grew approximately seven-fold from 5 percent to 37 percent.
Issued by the Virginia-based Promontory, the Bank Confidence Index is based on expectations from bank CEOs, presidents and CFOs for access to capital, loan demand, funding costs, and deposit competition 12 months ahead.