Regional Banks Prioritize Capital Preservation, Reduce Lending Activities

Regional banks across the United States are reportedly deciding to cut back on lending in order to preserve capital and improve margins.

Banks are unloading low-yielding bonds and loans or letting them mature and not replacing them in order to raise the average interest rates they earn on their assets, The Wall Street Journal (WSJ) reported Monday (July 24). This improves the margins they earn on lending and investments. This move has the potential to stabilize a bank’s earnings’ performance in the near term.

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