Control Loan Growth To Manage Deposit Cost
Many banks manage loan growth absent of other factors on the balance sheet. Historically, that has proven to be a mistake as strong loan growth often leads to a more rate sensitive bank. Many banks increase loan growth in a rising rate environment without regard to risk-adjusted loan return or deposit performance. While we often cover how to manage risk-adjusted loan return, in this article, we want to highlight the tradeoff between loan growth and deposit performance in hopes of giving bankers a better formula for high-performance.
