Banker confidence in primary performance indicators for the industry continues to skew slightly negative according to results from our Q3 2017 Bank Executive Business Outlook Survey. This quarter’s survey further shows changes to the Banker Confidence IndexSM, now at 48.1, a half-point improvement from last quarter (47.6). While bankers’ outlook for the future may be improving, the Index nevertheless falls below the key threshold of 50 for the second quarter in a row, a first since the survey’s inception 11 quarters ago. (Charted on a scale of 0-100, a score over 50 can be read as expansionary. A result below 50 can be read as contractionary.)

This cautionary outlook is a consistent theme throughout the survey and may represent ongoing frustration with political events in Washington, DC, or a fear that the spate of recent economic news may indicate a highpoint. On the other hand, it may be that bankers do not believe that economic conditions are as strong in their industry as in other sectors of the economy. Fewer than half (49.1%) of respondents saw economic conditions improve for their institutions over the past year. And even fewer (44.7%) expect to see improvements over the next 12 months.

This quarter, the survey also included supplemental questions dealing with banker perspectives on tax reform and interest rates. Findings show that community bankers are more optimistic than everyday Americans about tax reform this year. While respondents are split on the prospects for passage (49.1% Yes, 50.9% No), this stands in stark contrast to public polls that have shown only 14% of Americans believe it will be a reality this year.

Download the full report here.

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