Facing an increasingly competitive rate environment, U.S. banks say they have managed to keep deposits in-house even as customer funds migrate to higher-yielding options.
It has been three years since the Federal Open Market Committee began its latest round of tightening. It raised the Fed funds target range nine times — including four times in 2018 — to bring the range to a current 2.25% to 2.5%. Over that time, many banks have seen deposits shift out of noninterest-bearing accounts into interest-bearing ones, or they have raised rates on select accounts to keep customers happy.
As they deal with shifts in deposit mix and the subsequent creep of deposit betas, bank executives have highlighted their ability to keep those funds in-house.
“Even though rates and betas on off-balance sheet products have been higher, we haven’t seen a mass exodus of deposits,” said Chrystal Pozin, director of commercial deposits and pricing at Novantas, a bank analytics and advisory company. “It’s mostly staying on-balance sheet.”
Read the full article at S&P Global