Fed Data Shows Biggest US Banks Stagnate On Loans

The biggest U.S. banks have dialed back the portion of their balances they’re willing to use on loans to new lows, Bloomberg reported, citing data from the Federal Reserve.

This is furthering a trend during the pandemic that has seen less and less faith extended toward borrowers, the report stated.

The total loans at the 25 biggest U.S. banks were added up to less than 46 percent of their combined assets. That’s down from 54 percent year over year, Bloomberg noted.

The current numbers, Bloomberg reported, are the lowest figure in almost 36 years of weekly data from the Fed.

The newly released data shows the realities for the industry as it’s been emphasizing its support for businesses and households during the pandemic. Bloomberg reported that the total amount loaned out by banks has hit a snag, but the biggest U.S. lenders have boosted other aspects of their businesses like holdings of treasuries and government-backed mortgage securities.

According to Bloomberg, loans were down just over 1 percent since last year, with that figure including new loans ultimately backed by the Small Business Administration (SBA). Big bank balance sheets have expanded, though, rising 17 percent to $12 trillion as the Fed put in cash. Banks kept some of the funds as cash, using the rest to help purchase securities that the federal government guarantees.

In August, PYMNTS reported that banks were enacting stricter lending requirements for both businesses and households for residential real estate (RRE) loan categories, auto loans, credit card loans and other consumer loans.

The banks said at the time that their standards and terms for industrial loans for companies had been tightened, and they said standards had been increased throughout numerous consumer real estate loans. The reasons included uncertain economic outlooks and worsening industry-specific problems.