Looking ahead through 2018, bank executives see their businesses heating up—with expectations reaching new heights on overall economic conditions, according to Promontory Interfinancial Network's just-released Bank Executive Business Outlook Survey Report: Year in Review & What to Expect in 2018. Respondents' answers to quarterly Bank Executive Business Outlook Surveys from 2017 shed light on bankers' experiences over the past year and on what's to come in 2018.

"The expected increase in business by banks indicates not only that bankers believe that good things are in store for them, but also that they think the economy overall is headed in a positive direction," said Mark Jacobsen, President and CEO of Promontory Interfinancial Network. "Combined with tax reform in late 2017 and consecutive jobs reports that have exceeded economists' expectations in 2018, the optimism seems justified."

The Bank Confidence Index, which is calculated by measuring bankers' expectations for access to capital, loan demand, funding costs, and deposit competition over the next 12 months, ended 2017 at 50.5. This is a marked increase from Q2 2017 (47.6) and Q3 2017 (48.1), indicating that bankers have become more optimistic about the future. Charted on a scale of 0-100, a score over 50 can be read as expansionary – meaning that overall projections have crossed from contractionary to expansionary territory.

Access to capital is expected to be strong this year. At year-end, more than 37% of respondents said their outlook had improved.

Expectations for loan demand were near an all-time high, with 64% foreseeing an increase—a nearly seven-point increase from Q1 2017.

Overall economic conditions are expected to improve over the next 12 months, according to nearly 65% of respondents. This represents an 18-point increase from the start of 2017 and is the highest level recorded since Promontory Interfinancial Network began tracking this indicator.

Two areas where bankers show less optimism are deposit competition and funding costs. Eighty percent of respondents expect deposit competition to increase this year—a 15-point increase since the beginning of 2017. Nearly 89% of bankers foresee higher funding costs in 2018.