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The Impact of the Financial Crisis on Banks' Net Interest Margins

Author

Listed:
  • Holton, Sarah

    (Central Bank of Ireland)

  • Kelly, Jane

    (Central Bank of Ireland)

  • Lydon, Reamonn

    (Central Bank of Ireland)

  • Monks, Allen

    (Central Bank of Ireland)

  • O'Donnell, Nuala

    (Central Bank of Ireland)

Abstract

The financial crisis has seen Irish banks' profitability undermined and net interest margins fall to historic lows of 1 per cent and less, extending a pre-crisis trend of falling margins. Low margins raise concerns as to the ability of banks to generate recurring, long-term revenues. This Economic Letter traces the evolution of Irish banks' net interest margins from 1999 through to 2012 and identifies the key challenges facing banks in order to rebuild margins.

Suggested Citation

  • Holton, Sarah & Kelly, Jane & Lydon, Reamonn & Monks, Allen & O'Donnell, Nuala, 2013. "The Impact of the Financial Crisis on Banks' Net Interest Margins," Economic Letters 01/EL/13, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:01/el/13
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    File URL: https://centralbank.ie/docs/default-source/publications/economic-letters/economic-letter---vol-2013-no-1.pdf?sfvrsn=10
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    References listed on IDEAS

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    Cited by:

    1. Nevin, Ciarán, 2018. "Irish retail bank profitability 2003-20018," Financial Stability Notes 10-18, Central Bank of Ireland.
    2. Koffie Ben Nassar & Edder Martinez & Anabel Pineda, 2014. "Determinants of Banks' Net Interest Margins in Honduras," IMF Working Papers 2014/163, International Monetary Fund.
    3. Nevin, Ciarán, 2018. "Irish retail bank profitability 2003-20018," Financial Stability Notes 10/FS/18, Central Bank of Ireland.
    4. Valentina Salotti & Natalya A. Schenck & John H. Thornton Jr., 2016. "The Impact Of Real Estate Lending On Thrifts' Franchise Values During The 2007–2009 Crisis: A Comparison With Commercial Banks," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 39(1), pages 35-62, March.
    5. Koffie Nassar & Edder Martinez & Anabel Pineda, 2017. "Determinants of Banks’ Net Interest Margins in Honduras," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 1(7), pages 5-27, May.

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