...Net interest income (NII) will likely be roughly flat to moderately down for many banks as funding costs rise somewhat further in 2024. With a slow-growing economy, fee income may remain tepid in certain areas, like mortgage banking, but could rebound in others, like investment banking. Trading revenues may remain relatively robust. Banks will keep focusing on expenses, consolidating branches, and digitizing. However, inflation and investments in technology will raise expenses further. Profitability will weaken somewhat with expenses growing moderately and revenues little changed. We think provisions in 2024 won't change materially from 2023 levels. We expect an industry return on common equity of 9%-11%, down from an estimated 12%-13% in 2023. While most measures of credit quality remain in good shape, we expect delinquencies and charge-offs to continue rising toward historical averages amid limited economic growth, declining consumer savings, and stress in areas like commercial real estate....
