A historical perspective can be valuable when trying to place a bank into context. We all know that rates are lower than they’ve been in decades, but are banks any less profitable?
We decided to put together 10 years of historical bank stats as a way to gain a perspective on where banks current stand. (A link to download the spreadsheet is below)
From this data we built a few charts shown below. The most interesting chart is one showing bank funding cost, yield on earning assets and net interest margin. As rates have declined the earning yield on assets has declined slower than what banks have paid to depositors. This has resulted in a lower overall net interest margin, but not as low as some would expect. Bank average NIM peaked at 4.18% in 2005 and as of 2014 stood at 3.7%. As rates have fallen to zero the average NIM only fell 11%.
Another interesting chart is of bank capital:
Why is this chart interesting? Because it’s hard to find the financial crisis on the chart. Bank capital has remained mostly steady since 2004. This is average bank capital across all banks, and yes, there were bank failures. But as an industry banking has remained fairly steady since 2004. Certain segments of the banking industry are holding more capital now compared to in the past, but as a whole the industry is fairly stable.
If you’re interested in digging into this data we’ve provided a link to download the entire spreadsheet with raw data below.
Download the spreadsheet: CompleteBankData_BankingStats_Annual