Trepp: Banking Industry To Be Slow Going in 2012

The banking industry should not hold its breath for a rollicking good time in 2012, as indicated by Trepp's 2012 U.S. Banking Sector Outlook.

December 28, 2011
By Barbra Murray, Contributing Editor

The banking industry should not hold its breath for a rollicking good time in 2012, as indicated by Trepp L.L.C.’s 2012 U.S. Banking Sector Outlook. The New Year is not expected to provide a flashback to 2008, but it will not bear any resemblance to the glory days either.

It’s been a good year for banks in terms of profits, but the industry can bid adieu to forward progress in that arena in 2012. After two years of earnings growth, banks will earn less next year. In an attempt to offset lost revenue, they will turn to customers by adding new fees and advocating the use of credit cards. However, this plan will only do so much as, according to Trepp, it will add only a nominal amount to non-interest revenue.

From a regulatory standpoint, things are only going to get more complicated and more expensive for banks. With any number of challenges still in place, in 2012 and 2013, bank failures will continue, albeit at a slower pace.

As it pertains to commercial real estate, the banking industry forecast is neither completely gloomy nor blindingly bright. Commercial real estate loan performance is anticipated to slowly but surely improve over the next year. However, stringent lending standards and the continuation of high delinquency rates will continue to prevent a full recovery next year and for quite some time into the future.