Q2'25 Outlook for Commercial Banks: Assessing Bank Performance In An Uncertain Economic Environment

The fundamental environment had improved significantly for US banks heading into 2025. Peak competition for deposits and the worst-case fears for credit deterioration were in the rear-view mirror and banks and their investors were hopeful that the new Trump administration would offer a friendlier regulatory and pro-growth environment.

However, the view toward the banking sector has changed in the aftermath of new tariffs announced by the Trump administration, which exceeded most economists’ expectations both in scope and size. It is difficult to assess how tariffs will impact U.S. banks, particularly given how quickly the situation is evolving, but the presence of such a high level of tariffs increases the risk of a recession and threatens a resurgence in capital markets activity.

During this discussion, we’ll examine the latest outlook for the U.S. economy, as well as share our proprietary projections for commercial bank performance to show how the current operating environment will impact U.S Commercial Banks.