Top Bankers See US as Bright Spot as Second Trump Term Nears

As the U.S. economy braces for a potential second Trump term, industry leaders remain optimistic about the country's economic prospects. Despite global headwinds, the U.S. banking sector is expected to maintain its resilience, driven by a strong domestic economy and robust consumer spending. Top bankers highlight specific economic indicators and trends that support their positive outlook.



According to a survey by Deloitte, banks anticipate a noticeable dip in net interest margin, settling at around 3% by the end of 2025. However, other income from securities investments could be slightly higher as asset prices increase. Investment banking fees are expected to grow due to M&A and issuance activities, while asset management fees may also see an overall uptick. The lower rate environment could lead to higher refinancing fees for many banks. Overall, noninterest income as a percentage of average assets is estimated to increase to nearly 1.5%, the highest in the last five years.



Banks are expected to prioritize expense management, with the industry's average efficiency ratio hovering around 60% in 2025. This focus on cost control will help pave the way for sustainable growth, even as expenses remain higher due to investments in technology and retaining high-quality talent. Credit quality is expected to return to normal, with delinquencies and net charge-offs increasing modestly from 2024 levels. However, the commercial real estate (CRE) sector, particularly the office segment, continues to remain in distress, with regional banks potentially facing the brunt of potential loan losses.

Large, diversified banks are likely to perform better, thanks to their multiple revenue streams and stronger brand presence. Midsize and regional banks, however, may face tougher competition in modifying deposit rates. Meanwhile, credit card firms could benefit from rising credit card loans, while payments firms may see modest or flat growth in revenues. Banks focused on capital market activities could also see stronger performance but may face higher compensation expenses.



In terms of potential regulatory reforms, banks anticipate a focus on cyber risk, with regulatory supervision and enforcement in this area expected to increase. This could lead to higher investment in cybersecurity and data protection measures, as well as the adoption of generative artificial intelligence (GenAI) solutions to boost security.

Overall, the U.S. banking sector is poised to remain a bright spot in the global economy, even as it navigates potential regulatory changes and global headwinds. By focusing on expense management, diversifying revenue streams, and addressing emerging risks like cybersecurity, banks can position themselves for long-term success.