Trending topic: US financial executives on the impact of tariffs

With bank earnings season winding down, S&P Global Market Intelligence presents a roundup of executive commentary and articles around the potential impact of President Donald Trump's recently announced tariff policy on the US financial services industry.

Director of financial institutions research Nathan Stovall speaks with senior reporter Harry Terris about takeaways from banks’ first-quarter earnings results and bank news lead Lauren Seay about the impact tariffs are having on depository M&A.

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Most US banks kept their 2025 guidance intact during first-quarter updates, but some revised their expectations over fears of an economic downturn.

Citizens Financial Group Inc. broadly affirmed its guidance for 2025 but outlined risks, including slower-than-expected customer activity and higher credit expenses emanating from the Trump administration's tariffs and efforts to cut the federal government.

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Many US banks logged lower-than-estimated provisions for credit losses in the first quarter, even as macroeconomic uncertainty heightens. PNC Financial Services Group Inc. Chairman and CEO William Demchak said that tariff-driven uncertainty has "without question" slowed near-term lending activity but has not yet led to any credit deterioration.

However, some banks did report increases in nonperforming assets, net charge-offs and allowances for credit losses.

Memphis, Tennessee-based First Horizon Corp., which raised its allowance for credit losses to loans ratio by 2 basis points during the first quarter, expects tariff impacts to largely affect its consumer and commercial and industrial business lines. The company is particularly focusing on its retail trade, consumer finance, manufacturing and construction businesses, Chief Credit Officer Thomas Hung said.

At Citigroup Inc., executives said the company's transnational business orientation is resilient to a reordering of global trade, even under an end state where tariffs stay high.

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Agriculture is among the industries most affected by an increase in tariffs.

Kansas-based agriculture lender Tescott Bancshares Inc. is not letting tariff-related headwinds undermine its acquisition of First Bank of Beloit and pledged to support clients through any potential hardship. Pennsylvania-based Fulton Financial Corp. is examining its agriculture loan portfolio as the business could face pressure.

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Many M&A and capital markets transactions have been put on hold, and analysts are adjusting their investment banking revenue expectations.

JPMorgan Chase & Co. CFO Jeremy Barnum said some sectors have more complicated problems to solve than others, and smaller clients face more challenges than bigger corporates, which have more experience and resources dealing with uncertainty. Piper Sandler Cos. Chairman and CEO Chad Abraham said sectors especially impacted by tariffs include some consumer companies such as beauty and personal care, much of which is sourced in China.

Evercore Inc.'s equity capital markets group is optimistic that activity will increase soon, Chairman and CEO John Weinberg said.

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Even with deal headwinds, the two largest US bank M&A transactions of the year were announced just weeks after a marketwide sell-off, and the deals can provide a road map to bank M&A. Some bank executives might use it as they stay on the M&A prowl despite the uncertainty.

FB Financial Corp. executives remain confident in the third-quarter closing timeline for its acquisition of Southern States Bancshares Inc.