Wednesday, April 12, 2023

As everyone waits for banks to start filing their Q1 2023 earnings so we can hyperventilate about deposits, we thought we’d stall for time with a throwback to banks’ non-interest income — which, thanks to rising interest rates, has plummeted.

How much of a plummet? Figure 1, below, shows the total non-interest income for more than 315 banks that reported non-interest income every year for the last six years. Our sample includes everyone from JPMorgan Chase ($JPM) with its $62 billion reported in 2022, down to First Seacoast Bancorp ($FSEA) in lovely Dover, N.H., which reported $888,000 last year.

For those who prefer narrative disclosure, the story is this: non-interest income went from $245.2 billion in 2017 to $301.6 billion in 2021, a jump of 23 percent. That increase was driven by rock-bottom interest rates during the pandemic, which sparked a wave of home purchases and refinancings, which led to lots of non-interest income.

Then came 2022. Interest rates spiked, refinancings went the way of the dodo bird, and non-interest income plunged to $268.5 billion — an amount last seen circa 2019.

In other words, the pandemic-induced bubble of non-interest income for banks is now truly gone. No wonder the Biden Administration formally ended the Covid-19 national emergency earlier this week.

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