By David Henry

NEW YORK, (Reuters) – The U.S. bank sector of lending and taking deposits will see a stronger year this year as the U.S. expands its economy.

Fed’s decision could end low interest rates that banks had been experiencing for the majority of the past decade. This is especially true in light of COVID-19.

Due to interest rate drops and decreased borrowing, net interest income (the difference between the bank’s earnings from lending and what they receive on deposits) declined in the current pandemic. However, this will change in 2022.

Wednesday’s Fed signal indicated it was likely to increase U.S. interest rate in March. The futures for Federal Funds include three additional rate hikes in the latter part of this year.

Ken Leon, CFRA Research’s research director, stated that banks that have not enjoyed a stable yield curve for the past ten years are likely to do so. He was referring to the line showing the increasing interest rates that buyers of government debt must lend over a longer period of time.

It’s expected to bring significant growth in net interest revenue in 2022.

The median bank in America, which is one of the largest two dozen banks in the United States was able to generate 60% revenue from net interest income in its fourth quarter. Barclays Jason Goldberg (LON) analyst. It was the lowest ratio in six-years, down from 66% three year ago (previous to the Pandemic and subsequent Fed Rate cuts).

JPMorgan Chase & Co (NYSE:) told analysts earlier this month that net interest income from its businesses beyond securities markets could increase to $50 billion in 2022 from $44.5 billion last year, a 12% increase.

Wells Fargo (NYSE:) & Co said its net interest income could rise by 8%.

Depending on how they can retain low-cost deposit money and then use it to borrow and invest in high-yielding securities, some banks will be more fortunate than others. Banks that have a portfolio that is heavily geared toward floating rate loans will be more successful.

Goldberg believes that net interest income growth will continue through 2023 because “some banks’ balances are just more rate sensitive”.

Bank of America Corp’s (NYSE:) executives didn’t give as detailed a forecast when they reported earnings. However, they stated that the bank expected “robust” growth in net income in 2011, starting with “a few hundred million dollars” more than the $11.4billion in fourth-quarter earnings.

Citigroup Inc (NYSE: ) officials stated that they will not give estimates of net income on March 2, when there is an Investor Day. Mark Mason, Chief Financial Officer, stated that higher interest rates around the world and more cash being invested in securities and loans will support net income.

According to executives, the uncertain outlook on interest rates is making it difficult for forecasting net income. However, there are other reasons for an increase.

JPMorgan estimates that changes in interest rates are responsible for less than one third of its increase in net income. It stated that the majority of the increase should be due to loan growth.

Wells Fargo indicated that it believes higher rates are responsible for nearly two-thirds the expected increase, with balance sheet and loan growth providing the remainder.

According to Ken Usdin, an analyst at Jefferies, the net interest income of large banks will increase, regardless of higher Fed rates, he said in a report.

Businesses are expected to borrow more from banks, especially those that want to increase inventories following sales interruptions.

Citigroup and JPMorgan also stated that they anticipate more interest income coming from credit card customers who continue to incur interest charges, rather than paying their balances down as in the case of the pandemic.

Executives have stated that they expect modest increases in deposit rates.