Low margins worry U.S. banks

The profit margins for U.S. banks have become wafer thin as the spread between their borrowing and lending rates has shrunk to the levels once seen in the 1950s. With the Federal Reserve’s keeping the interest rate at a historic low, banks are struggling to stay profitable, says a report in the Financial Times. Wells […]

By Staff | January 14, 2013 | Last updated on January 14, 2013

1 min read

The profit margins for U.S. banks have become wafer thin as the spread between their borrowing and lending rates has shrunk to the levels once seen in the 1950s.

With the Federal Reserve’s keeping the interest rate at a historic low, banks are struggling to stay profitable, says a report in the Financial Times.

Wells Fargo suffered a sell-off last week when the bank publicly acknowledged it couldn’t find “safe and profitable avenues” to invest leading to a steep drop in its net interest margin.

“JPMorgan Chase, Bank of America and Citigroup are all expected to suffer from the same phenomenon in their fourth-quarter earnings this week,” the report added.