Low Rates Pummel Bank Profits - WSJ.com
Superlow U.S. interest rates are squeezing bank profits, complicating the industry’s nascent recovery from the financial crisis.
An important gauge of lending profitability, known as net interest
margin, has dropped to its lowest level in three years. The measure
tracks how much banks earn when they borrow from depositors and then
lend or invest those funds.
The squeeze is the flip side of the Federal Reserve Board’s four-year
effort to revive the sluggish U.S. economy, with near-zero short-term
interest rates and repeated rounds of bond purchases that aim to reduce
long-term rates as well. Ten-year U.S. Treasury yields hit 1.43% in
July, their lowest level since World War II.
Savers are also being pummeled by low rates, making it prudent to allocate at least a portion of one’s savings to gold.
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