Federal Reserve Bulletin

Profits and Balance Sheet Developments at U.S. Commercial Banks in 2005

Figure 18. Net interest margin, by size of bank, 1990-2005. Data plotted as curves. Two panels. In the top panel, the margin for all banks begins in 1990 at about 3.8 percent, rises to a peak of about 4.3 percent in 1992, declines to reach about 3.9 percent in 2000, rises to reach about 4 percent in 2002, then declines to reach about 3.5 percent in 2005. In the bottom panel, the margin for the 10 largest banks begins in 1990 at about 3 percent, rises to reach about 3.7 percent in 1994, declines to reach about 3.3 percent in 1998, rises on balance to about 3.75 percent in 2002, then falls to reach about 3 percent in 2005. The margin for large banks begins in 1990 at about 3.6 percent, rises to about 4.3 percent by 1992, rises on balance to reach about 4.4 percent in 1997, declines to about 3.8 percent by 2003, and stays at that level through 2005. The margin for medium-sized banks begins in 1990 at about 4.25 percent, rises to reach about 4.75 percent in 1993, stays at about that level through 1997, falls in steps to about 4 percent by 2003, and then rises slightly to reach about 4.1 percent in 2005. The margin for small banks begins in 1990 at about 4.4 percent, rises to reach about 4.7 percent in 1992, holds at about that level through 1997, declines to reach about 4.2 percent in 2003, and then rises slightly to about 4.25 percent by 2005.

Note: The data are annual. Net interest margin is net interest income divided by average interest-earning assets. For definition of bank size, refer to the general note on the first page of the main text.  Return to article