Banks Focus on Core Deposits as Credit Quality Beats Expectations

U.S. banks are taking steps to reduce reliance on higher-cost funding, with some selling loans and others focusing on customer relationships that generate more deposits, S&P Global Market Intelligence reported. The shift comes as higher interest rates increase competition for deposits while loan demand remains strong.

Meanwhile, S&P also wrote that third-quarter credit results at large U.S. banks were better than expected, with 14 of 15 reporting lower-than-expected provisions for credit losses and 11 reporting lower net charge-offs.