M&T Shares Tumble After Earnings Miss, Lower Expectations

A New York branch of M&T Bank


Daniel Tepper/Bloomberg News

Shares of

M&T Bank

MTB -4.40%

fell 4.3% Thursday afternoon after the company said it expects its net interest income to increase less than previously forecast due to lower interest rates.

M&T’s forecast is the latest example of how the Federal Reserve’s pivot to possibly lower rates is affecting banks across the spectrum. When the Fed lowers rates, banks are limited with what they can charge in interest on loans, which can hurt their earnings.

M&T’s finance chief Darren King said every quarter-percentage-point cut to rates should pressure M&T’s net interest margin—an important measure of bank profitability—by between 0.05 and 0.08 percentage point the year after. He said the company still expects net interest income to grow year over year, but said M&T will look at its costs.

“With the revenue outlook being more subdued than we previously thought, we’re examining our spending as we look forward,” Mr. King said.

Earlier this week,

JPMorgan Chase

& Co. lowered its lending-profit guidance and

Bank of America

Corp. said any rate cuts from the Fed could hurt net interest income growth.

“Even if they decrease rates at the end of July, we’re likely still to see a little bit of movement in deposit rates,” Mr. King said. “And then as we go from there, we’ll start to see them come down.”

The Buffalo, N.Y.-based lender reported second-quarter earnings Thursday that missed analysts’ estimates. The company’s net income fell due to higher expenses. Costs included a $48 million charge from M&T agreeing to sell its interest in an asset manager, which hurt profit by 27 cents a share.

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