U.S. Banking Quarterly Comment: 3Q17 (Earnings Improve, Loan Growth Muted)

...Earnings Broadly Improve: Most of the largest 18 U.S. banks included in this report once again experienced modest bottom line expansion relative to 2Q17 and to the prior-year quarter. The results reflected generally increased spread revenue attributable to higher short-term interest rates and good costs controls offset by higher provisioning for loan losses and softer capital markets activity. We expect relatively consistent operating results into 2018 as credit quality is expected to remain benign on the whole while potentially higher short-term rates support spread revenue. Fitch has forecast one more Fed rate hike in 2017 and that the Fed Funds Target rate will be 2.5% by year-end 2018. Loan Growth Muted by Capital Markets Availability: While most banks with meaningful loan portfolios in this report disclosed some level of loan growth during the quarter, expansion was relatively muted. The median annualized quarter-over-quarter was approximately 2% compared to a more robust 3.4% in 2Q17....

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