After three years of turmoil, it’s natural to yearn for something normal. Normalization is still a long way off, according to the largest US banks, which no doubt have an accurate idea of ​​what keeps households and businesses running smoothly. Based on their annual earnings that they have posted over the last 15 days, financial institutions ended 2022 in a very different position than they did in 2019. They have more deposits, more loans and more employees. And while some key metrics, such as transaction fees, have declined, others remain elevated, including income from trading stocks and bonds. How this will all play out in the end remains to be seen. Chief among the mysteries is how much interest the banks will collect in 2023 and beyond. This is a critical element of the valuation as it usually accounts for half of their income.

Some financial institutions have some tips, some don’t. US investment bank JP Morgan said interest income could reach $73 billion this year, the biggest ever, but chief financial officer Jeremy Barnum warned that it involved “a lot of guesswork.” Bank of America will not rely on what it expects. No wonder they are careful. Interest rates rose at their fastest pace when the Federal Reserve was trying to keep up with inflation, which is now slowing down. However, it is at a higher level than the bank’s target of 2%. Even a 25 basis point shift could have a significant impact on a $1 trillion loan portfolio. dollars, for example, from Bank of America, as well as in huge stocks of securities. The Federal Reserve estimates that interest rates could rise to 5%, but Jamie Dimon, chief executive of JP Morgan, told CNBC Thursday that he thinks 6% is more likely.

Even so, however, the relationship between benchmark interest rates and the interest rate charged by banks becomes increasingly difficult to predict. One reason is that the number of non-bank lenders has increased since official lending rates were last this high in 2007. According to the BofA ICE Index, even with the weakening of economic forecasts. This environment creates more dissonance about what is normal and when it might return. While most banks have a reasonable idea of ​​what bad debt to expect in a traditional lending cycle, they are currently forced to lend at rates that reflect their overall assessment of the world.

Finally, clients, on the other side of the equation, are just as mysterious. Their deposits skyrocketed during the virus and their spending plummeted. Bank of America chief Brian Moinian said customers who had about $3,500 in the bank now have almost four times as much. The number is decreasing, but unevenly. Wealthier clients, Mr. Moinyan adds, have already invested much of their wealth in more profitable investments.