M&T Bank, one of the largest bank lenders for commercial real estate, cut its 2025 forecast for profit from loans because of tariff-induced economic concerns as Goldman Sachs CEO David Solomon both praised the benefits of international trade to the United States and said there can be room for improvement.
The earnings guidance and political commentary came Monday as the financial sector grapples with the Trump administration's implementation of tariffs it said will even an unfair trading situation for the United States. The disputes with various countries increase the risk of recession amid the “rapid and significant reversal of sentiment driven by uncertainty about trade and fiscal policies,” Robin Vince, CEO of Bank of New York Mellon, said last week.
M&T, based in Buffalo, New York, said Monday it expects full-year 2025 net interest income between $7.05 billion and $7.15 billion, down from its previous estimate of a range between $7.1 billion and $7.2 billion. Net interest income refers to the revenue that banks generate from charging interest on loans, offset by interest paid to depositors. M&T also cut its estimate for its average balance of total loans in 2025 to the $135 billion to $137 billion range, lower than its earlier forecast of $137 billion to $139 billion.
The current economic effect on U.S. banks, an industry at the center of the economy, is gaining added attention after the U.S. stock market had wide gyrations in recent weeks as investors try to absorb shifts in tariff policies by the Trump administration. President Donald Trump said Monday he’s considering temporary tariff exemptions for the automotive sector, while he expects to levy tariffs on pharmaceutical imports in the “not too distant future,” according to Bloomberg. Trump said over the weekend that previously announced tariff relief for tech companies will be temporary.
For M&T, the reduced guidance is a result of its clients postponing major financial transactions due to the uncertain effects of tariffs, Daryl Bible, chief financial officer, said during a conference call.
“Business-wise, our customers actually really wanted to make a lot of investments,” Bible said. “They want to do acquisitions. They are just really on pause right now. I think it's just a lack of confidence. They don't know what the rules of the road are.”
M&T’s exposure to the commercial property sector has declined over the past year as borrowers paid off loans early and the bank originated fewer new loans. M&T’s average balance of commercial real estate loans dropped 20% in the first quarter compared to the same time a year earlier, to $26.3 billion.
Property lending expected to grow
However, Bible said he expects commercial real estate lending to start increasing again later in 2025, with an emphasis on construction loans. M&T also reported an improvement in the number of commercial real estate loans that are delinquent. Total commercial mortgages for which borrowers are late on payments decreased 3.4% to $25.9 billion as of March 31 compared to Dec. 31, 2024.
The uncertainties surrounding the effect of the Trump administration’s trade disputes have led to concerns among Goldman’s clients, both domestic clients and those outside the U.S., Solomon said.
“Our clients, including corporate CEOs and institutional investors, are concerned by the significant near-term and longer-term uncertainty that has constrained their ability to make important decisions,” Solomon said during a conference call. “What we're hearing from clients, particularly clients in Europe and other places around the world, is they don't like the level of uncertainty.”
Solomon emphasized that American businesses and consumers have been helped economically by global trade in the past 80 years.
“It is important to recognize that few countries have benefited more from the post-World War II economic and financial order than the U.S.,” Solomon said.
However, Solomon also said that “this doesn't mean meaningful reform in certain areas is not warranted,” without providing specifics.
Bank of America, PNC Financial Services Group and Citigroup are scheduled to report first-quarter earnings on Tuesday.