Survey: Banker confidence lacking amid tariff concerns

Most bankers are pessimistic over both the current and near-term economic environment amid tariff-related concerns, according to IntraFi’s Q1 2025 survey of bank executives..Seventy-three percent of surveyed bankers said the country is either in a recession or will enter such a downturn in the next 12 months. Twenty-two percent listed interest rate uncertainty as their No. 1 economic concern, followed by 16 percent who cited new tariffs and 13 percent who reported credit quality deterioration. Bankers who said the country was either in a recession or would soon enter one were more likely to cite tariffs as a major concern. President Donald Trump has taken a more aggressive approach to tariffs in his second term than his first. Last month, he raised baseline tariffs on Chinese imports to 145 percent, with China responding by slapping a minimum 125 percent tariff on U.S. goods and limiting exports of rare earth materials crucial to high-tech countries. Trump also implemented a 25 percent tariff on most goods from Canada and Mexico but later indefinitely exempted goods deemed compliant with a trade agreement implemented in 2020. Forty three percent of bank executives expect the economy will worsen in the next 12 months, while 34 percent say conditions will be unchanged. Twenty two percent say the economy will improve. Despite the lack of optimism, the majority of executives — 45 percent — said economic conditions are unchanged from 12 months ago. Twenty eight percent reported worsening economic conditions, while 26 percent said conditions have improved. Nearly 60 percent said tariffs could pose “moderate challenges, especially for customers in industries like manufacturing, agriculture and retail.” Fifteen percent expect tariffs won’t have a significant impact on their bank or local economy, but do expect uncertainty over future trade and economic policies will pose an issue. There was a 24 percent increase in bankers expecting overall economic conditions to worsen compared to the fourth quarter of last year, while the number expecting conditions to improve fell 19 percent. Consumer spending reached its lowest mark in two years in March, according to the report. Credit unions undertook a record 22 whole-bank acquisitions last year, besting the previous record of 16 in 2022. Fifty-five percent of bankers said they would not sell to a credit union if their bank was for sale, compared to 45 percent who reported being willing to sell to the group with the best offer, even if the buyer was a credit union.Conducted from April 2-16, the survey included responses from 115 bank CEOs; 52 presidents; 233 CFOs; and 27 COOs. Other report findings included:Eighty percent said their access to capital was unchanged from 12 months ago, with 14 percent listing a moderate improvement. Seventy five percent expect their access to capital will be the same 12 months from now, while 14 percent anticipate a moderate improvement. Forty three percent reported higher loan demand than 12 months ago, while 31 percent reported a drop in loan demand. Thirty-nine percent expect an increase in loan demand 12 months from now, compared with 28 percent who anticipate a drop. Sixty six percent say funding costs will fall over the next 12 months, while only 9 percent anticipate an increase.