Coverage: weekly note · Information to 28 August 2025
TGB Premium Intelligence — Open Access
This report was originally available exclusively to TGB Premium subscribers. It is now part of our open research archive.
TGB Weekly Research Note · 28 August 2025
With the policy rate on hold, the US industry net interest margin edged up one basis point to 3.26% in the second quarter of 2025.
The desk view
The industry net interest margin of FDIC-insured institutions was 3.26% in the second quarter of 2025, up one basis point, as the cost of funds fell 1 basis point and asset yields held. Margins at Wells Fargo, Citigroup and PNC rose by between 1bp and 4bp, while Bank of America's net interest yield slipped 5bp and JPMorgan Chase's fell 15bp. The Federal Reserve has held its target range at 4.25% to 4.50% since December 2024. Our reading is that the pause removed the main pressure on asset yields; margins now depend on how far deposit costs can fall if cuts resume.
A margin that held rather than widened
The Federal Deposit Insurance Corporation (FDIC) described the industry net interest margin (NIM) as relatively flat in the second quarter of 2025, up one basis point to 3.26%. The cost of funds fell 1 basis point while the yield on earning assets was unchanged. Net interest income rose $2.9 billion, or 1.6%.
Industry net income nonetheless fell $677.3 million to $69.9 billion. Provision expense rose $7.6 billion, which the FDIC attributed largely to the acquisition of one large bank; absent this, net income would have increased.
Longer-term loans and securities fell for the tenth consecutive quarter to 34.1% of assets, and unrealised securities losses fell $17.9 billion to $395.3 billion as low-yielding securities rolled off.
Large banks: mixed margins
Citigroup's net interest income rose 8% on the quarter to $15,175 million and its NIM widened 4bp to 2.51%. PNC's NIM rose 2bp to 2.80%; the bank linked its 2% rise in net interest income to loan growth, fixed-rate asset repricing and one additional day in the quarter.
Wells Fargo's margin was 2.68%, against 2.67% in the first quarter, but net interest income was still down 2% year on year, which the bank attributed to lower rates on floating-rate assets and deposit mix changes. Bank of America's net interest yield fell to 1.94% from 1.99%, yet net interest income grew for a fourth consecutive quarter and was up 7% on the year, helped by fixed-rate asset repricing and deposit and loan growth.
JPMorgan Chase's net yield on interest-earning assets fell to 2.43% from 2.58%, and to 3.71% from 3.80% excluding Markets. Its net interest income excluding Markets was down 1% on the year, which the bank attributed to lower rates and deposit margin compression.
NIM and net interest income, selected US banks
| Bank | NIM 2Q24 | NIM 1Q25 | NIM 2Q25 | NII 2Q25, $m |
|---|---|---|---|---|
| Bank of America* | 1.93% | 1.99% | 1.94% | 14,815 |
| Citigroup | 2.41% | 2.47% | 2.51% | 15,175 |
| Wells Fargo | 2.75% | 2.67% | 2.68% | 11,708 |
| PNC | 2.60% | 2.78% | 2.80% | 3,555 |
| JPMorgan Chase** | 2.62% | 2.58% | 2.43% | 23,209 |
Source: Bank of America Corporation, Bank of America Reports 2Q25 Net Income of $7.1 Billion and EPS of $0.89 (earnings release), 16 July 2025; Citigroup Inc., Citigroup Quarterly Financial Data Supplement 2Q25, 15 July 2025; Wells Fargo & Company, Wells Fargo Reports Second Quarter 2025 Net Income of $5.5 billion, or $1.60 per Diluted Share (news release), 15 July 2025; The PNC Financial Services Group, Inc., PNC Reports Second Quarter 2025 Net Income of $1.6 Billion, $3.85 Diluted EPS (press release), 16 July 2025; JPMorgan Chase & Co., Earnings Release Financial Supplement, Second Quarter 2025, 15 July 2025.
*Net interest yield and net interest income on a fully taxable-equivalent basis. **Net yield on interest-earning assets.
Size shapes the margin
Banks with assets above $250 billion earned a NIM of 2.98%, against 3.87% for banks below $100 million, a gap of 89bp. Community bank NIM rose 16 basis points to 3.62%, a fifth consecutive increase.
Funding was supportive: domestic deposits rose $101.5 billion, a fourth consecutive quarterly increase, although insured deposits fell $87.3 billion while estimated uninsured deposits rose $186.4 billion. Loans grew 2.1% on the quarter and the net charge-off ratio fell 6 basis points to 0.60%.
NIM by bank asset size, Q2 2025, %
A pause that may be ending
The Federal Open Market Committee (FOMC) last cut on 18 December 2024, to 4.25% to 4.50%, and held that range on 30 July 2025, with two members voting for a 25bp cut. On 22 August 2025 the Chair said the shifting balance of risks "may warrant adjusting our policy stance". Renewed cuts would again pressure floating-rate asset yields, the effect Wells Fargo cited. Whether margins hold will depend on how quickly deposit costs follow the policy rate down.
What to watch
- 16-17 September 2025: next FOMC meeting
Primary sources: Federal Deposit Insurance Corporation, FDIC-Insured Institutions Reported Return on Assets of 1.13 Percent and Net Income of $69.9 Billion in Second Quarter 2025 (press release), 26 August 2025; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (30 July 2025), 30 July 2025; Federal Deposit Insurance Corporation, FDIC Quarterly Banking Profile Second Quarter 2025 (FDIC statement), 26 August 2025; Citigroup Inc., Citigroup Quarterly Financial Data Supplement 2Q25, 15 July 2025; JPMorgan Chase & Co., Earnings Release Financial Supplement, Second Quarter 2025, 15 July 2025; Wells Fargo & Company, Wells Fargo Reports Second Quarter 2025 Net Income of $5.5 billion, or $1.60 per Diluted Share (news release), 15 July 2025; The PNC Financial Services Group, Inc., PNC Reports Second Quarter 2025 Net Income of $1.6 Billion, $3.85 Diluted EPS (press release), 16 July 2025; Bank of America Corporation, Bank of America Reports 2Q25 Net Income of $7.1 Billion and EPS of $0.89 (earnings release), 16 July 2025; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (18 December 2024), 18 December 2024; JPMorgan Chase & Co., JPMorganChase Reports Second-Quarter 2025 Net Income of $15.0 Billion ($5.24 per Share) (earnings release), 15 July 2025; Federal Deposit Insurance Corporation, Quarterly Banking Profile, 2025 Quarter 2 (full report), 26 August 2025; Board of Governors of the Federal Reserve System, Monetary Policy and the Fed's Framework Review (speech by the Chair at the Jackson Hole economic symposium), 22 August 2025; Board of Governors of the Federal Reserve System, Minutes of the Federal Open Market Committee, July 29-30, 2025, 20 August 2025.