Arnab Pandey

U.S. bank net interest margins are entering 2026 with notable momentum. After expanding for seven consecutive quarters, the setup remains constructive as rate cuts work their way through funding costs and loan demand continues to recover.

Lower deposit costs have begun to flow through balance sheets, while loan production has rebounded and asset yields have improved. If the yield curve steepens further — potentially becoming uninverted for the first time in years — it would provide an additional structural tailwind for margins.
Consensus expectations point to continued expansion next year, with industry margins forecast to rise again in 2026 and beyond. Deposit growth and easing funding pressures remain supportive, even as competition for deposits intensifies alongside stronger loan demand.

That said, the margin story is becoming more nuanced. Stickier deposit pricing and the pace of policy easing will matter, as will how quickly asset yields adjust in a shifting rate environment. The direction remains positive, but execution and balance-sheet mix will increasingly drive outcomes.

The broader takeaway: margins are no longer just rebounding — they are entering a phase where curve dynamics, deposit behavior, and loan growth will define the next leg of performance.

Source: https://www.capitaliq.spglobal.com/apisv3/spg-webplatform-core/news/article?id=96939227&KeyProductLinkType=18