...Net interest income (NII), which fell in the first quarter, will likely be moderately down for the full year, with funding costs rising further through the middle of the year. Fee income rose for most banks in the first quarter, partly on better investment banking results, but higher-for-longer interest rates may limit improvement for the full year. Overall expenses should drop for the full year due to one-time charges in 2023. However, inflation, investments in technology, and perhaps some increase in business activity will push core expenses somewhat higher, notwithstanding banks' continued focus on cost controls. Profitability will weaken somewhat on lower NII and higher provisions. We expect an industry return on common equity of 10%- 11%, down from greater than 11% in 2023. We expect delinquencies and charge-offs, particularly in certain asset classes, to continue rising amid high rates, declining consumer savings, and stress in areas like CRE. Some banks may increase capital ratios...
