Bank of America Corp (BAC): The Big Bank Temptation in 7 Charts

5. The big banks are being squeezed more than the rest

Source: FDIC

Historically, bigger banks have operated on smaller net interest margins than smaller competitors. This is a function of a big bank’s ability to provide additional services to generate income outside of interest income.

However, with the increased regulation currently being written and deployed targeting big banks, it will be unlikely that these institutions will be able to maintain the historical level of non interest income.

So at this point we’ve established that the industry is healing and banks are again profitable. But we also see that profits today are lower relative to assets and equity, and that its only getting harder to squeeze out each dollar of profit. Capital requirements are higher. Loan growth is increasing. Net interest margin is being squeezed.

Clear as mud?