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How much deposit costs increase is anyone’s guess

February 24, 2017

Deposit costs across the banking industry will increase, but by how much is debatable.

Banks of varying sizes and in different markets have included a variety of deposit betas—or how much of the changes in market rates they will have to pass onto customers—in their assumptions.

Many investors expect higher short-term rates will lead to higher net interest margins. But ultimately the actual deposit beta that a bank incurs will dictate just how much an institution benefits from increases in short-term rates.

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