Concern about interest rate risk grew significantly among bank board members and bank executives in 2023, according to a new survey by Bank Director magazine. Ninety-one percent of board members and executives said their concern about interest rate risk increased over the past year. (The survey was conducted in January, before the failures of Silicon Valley Bank and Signature Bank.) Other areas of growing concern were cybersecurity (83%) credit risk (77%), liquidity (71%) and compliance (70%).
Asked how rising interest rates have affected deposit retention, 61% of respondents said they experienced some deposit loss, with minimal to moderate effects on their funding base. Fifty-three percent said rising interest rates have improved their net interest margins.
Bankers were also asked about their organizations’ three most significant strategic challenges over the next 18 months. Deposit pricing was the most frequently cited challenge, with 51% of respondents listing it. Other top challenges included attracting and retaining talent (50%), slowing credit demand (31%), liquidity management (29%) and evolving regulatory or compliance requirements (28%).