What Falling Rates Mean for M&T Bank's Net Interest Income?

Core Insights - M&T Bank Corporation (MTB) has experienced a steady growth in net interest income (NII), with a five-year compound annual growth rate (CAGR) of 15.4% ending in 2024, and a nearly 1% year-over-year increase in the first nine months of 2025 [1][9] Financial Performance - For 2025, management anticipates NII to be between $7.05 billion and $7.15 billion, an increase from $6.9 billion in 2024, with a net interest margin (NIM) projected in the mid-to-high 3.60% range compared to 3.58% the previous year [3][9] - Average loan and lease balances are expected to be between $135 billion and $137 billion in 2025, slightly higher than $134.7 billion in 2024 [3] Market Outlook - The outlook for MTB's NII expansion is positive due to falling interest rates and easing lending standards, with the current interest rate between 3.50% and 3.75% following rate cuts in 2024 and 2025 [2] - Lower interest rates are expected to stabilize funding costs, improve borrower solvency, and encourage increased lending activity, which can enhance MTB's profitability [2] Peer Comparison - Fifth Third Bancorp (FITB) has a five-year CAGR of 4.2% in NII, with a 6.2% increase in the first nine months of 2025, reaching $4.4 billion [6] - U.S. Bancorp has a five-year CAGR of 4.4% in NII, with a 2% increase in the first nine months of 2025, totaling $4.251 billion [7] Stock Performance - M&T Bank's shares have increased by 6.9% over the past six months, compared to the industry's growth of 20.3% [8]