Bank executives agree on 2023 recession, disagree on timing

Bank executives expect a recession will strike this year but disagree on the timing of the looming downturn, according to an IntraFi survey of bank CEOs, CFOs, presidents and chief executive officers from nearly 450 U.S. banks. .According to the fourth quarter report, 36 percent expect the recession to begin in the second half of 2023 while 34 percent say it will come in the first six months of the year. Twenty-four percent said the U.S. is already in a recession..Two-thirds of executives said the U.S. economy is now more likely to have a marked economic downturn than it was six months ago. Only 34 percent predicted the economy will have a softer landing. Forty-eight percent expressed concern that the Fed raised interest rates too quickly to combat inflation while 44 percent said the Fed is appropriately handling the increases. .Predictions of a downturn are similar to the sentiments of bank economists in the American Bankers Association's latest Credit Conditions Index, in which bank economists predicted that credit conditions would weaken over the next six months as the economy slows and the Federal Reserve continues to raise interest rates to combat inflation. .In the IntraFi report, 31 percent of executives said the Consumer Financial Protection Bureau's proposed small business rule that would require lenders to report the amount and type of small business credit applied for and demographic information about applicants is their most important regulatory issue this year. That was followed by the 23 percent who cited the Fed's ongoing review of capital requirements and 18 percent who are most concerned about CRA reform. .Regarding deposit rates, 36 percent said their bank had increased those prices. Eighteen percent reported doing so based on customer type; while a slightly smaller share reported increasing rates only on time deposits. .More than three-quarters of respondents said their access to capital was the same as it was 12 months prior. Only fifteen percent said it had moderately worsened. The vast majority also said they expect capital access to remain the same over the next 12 months. . Forty-three percent said loan demand had moderately decreased over the last 12 months. Twenty-four percent reported a moderate increase. Fifty-three percent expect loan demand to weaken over the next year, compared to only 24 percent who say it will strengthen.