Net interest margin of the U.S. banking industry 2015-2023, with forecasts to 2026

The net interest margin for the U.S. banking industry is expected to decline in 2025, after reaching its highest level since 2019 in 2024. In 2023, the net interest margin stood at 3.16 percent, and the forecast suggests a further increase to 3.24 percent in 2024. This trend is closely tied to central bank monetary policy. The Federal Reserve's aggressive interest rate hikes throughout 2022 and into 2023 have allowed banks to earn higher net interest margins by widening the spread between their lending rates and deposit costs. However, as the Fed begun cutting rates in September 2024, and is projected to continue doing so, this compression of the interest rate spread is expected to lead to a decline in the industry's overall net interest margin in 2025 and beyond.