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

M&T Bank Corporation MTB has been witnessing a steady growth in its net interest income (NII) over the past few years. Over the past five years (ending 2024), NII registered a compound annual growth rate (CAGR) of 15.4%. In the first nine months of 2025, the metric rose nearly 1% year over year.

Going forward, falling interest rates and easing lending standards are brightening the outlook for MTB’s NII expansion. Following the initial easing in 2024 and three subsequent rate cuts in 2025, the interest rate now stands in the range of 3.50–3.75%. With lower rates, funding costs will stabilize gradually, supporting MTB’s NII growth. Also, declining rates reduce the burden of carrying debt, often improving borrower solvency and easing payment stress. This dynamic tends to lower delinquency rates and reduce charge-offs. Lower rates are expected to encourage consumers and businesses to borrow. Such increased lending activity can result in larger profitability for MTB as it earns more interest on these loans.

For 2025, management expects NII (tax-equivalent basis) to be in the range of $7.05–$7.15 billion compared with $6.9 billion reported in 2024. The bank also expects its net interest margin (NIM) to be in the mid-to-high 3.60% range compared with 3.58% a year earlier. Further, the average loan and lease balances are projected to be in the range of $135–$137 billion in 2025, modestly higher than $134.7 billion in 2024.

Looking to 2026, while expectations are mixed, they broadly suggest moderate easing over the course of the year. At the Goldman Sachs 2025 U.S. Financial Services Conference, M&T Bank’s management highlighted that loan and deposit growth is expected to expand the balance sheet, which is expected to support NII further, with margins projected to remain in the low 3.70% range in 2026.

How Are MTB’s Peers Faring in Terms of NII?

M&T Bank’s peers, including Fifth Third Bancorp FITB and U.S. Bancorp USB, are similarly influenced by the Fed’s interest rate trajectory.

Fifth Third has maintained solid momentum in NII growth, with a five-year CAGR (ending 2024) of 4.2%. In the first nine months of 2025, the bank’s NII (tax-equivalent basis) rose 6.2% to $4.4 billion compared with the same period a year ago. Fifth Third’s NIM also increased year over year to 3.10% from 2.88% during the same period a year earlier. Adjusted NII is now expected to grow 5.5–6.5% in 2025 from $5.6 billion in 2024, supported by stabilizing funding costs and steady loan growth.

U.S. Bancorp has witnessed consistent NII growth, registering a five-year CAGR of 4.4% through 2019–2024, with momentum continuing in the first nine months of 2025. The company’s NII (tax-equivalent basis) was $4.251 billion, up 2% from the same period a year ago. As of Sept. 30, 2025, U.S. Bancorp’s NIM stood at 2.75%, slightly higher than 2.74% reported a year earlier. Looking ahead, stabilizing funding costs, loan growth, and investment portfolio repositioning are expected to support NII expansion in the upcoming period.

MTB’s Price Performance & Zacks Rank

Shares of M&T Bank have risen 6.9% in the past six months compared with the industry's growth of 20.3%.

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The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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