This leveling of loan-loss provisions accompanied by the cooling of fees from mortgage refinancings and originations will heighten attention on new opportunities for asset growth and higher-margin assets. Most observers expect that business borrowers will soon resume more normal levels of borrowing activity.
Although their return may provide one avenue for earnings growth to banks of all sizes, it is important that the competitive drive to win borrowers is not allowed to overcome the discipline of prudent lending practice. Directors and management should be particularly attentive to this possibility given the extended period of weak loan demand that we've recently experienced.