Consumer Demand Has Big Banks Charging Up

The Federal Reserve’s latest survey of senior loan officers found an increasing demand for home, auto and credit card loans amongst consumers, The Wall Street Journal reported yesterday (Aug. 3).

The data point to increased growth in the second half of year, which has left big banks ready to meet that need.

According to the recent Senior Loan Officer Opinion Survey on Bank Lending Practices, some of the large banks have lessened the standards for credit card loans based on the demand. The findings also show the ratio of credit card debt issued by big banks compared to personal consumption expenditures has almost reached its post-recession average.

Banks that did report loosening loan terms cited “more-aggressive competition” from both banks and non-bank lenders as a key reason, WSJ said.

Senior loan officers were surveyed from 71 domestic banks and 23 U.S. branches of foreign lenders, and the questioning was conducted between June 30 and July 14 of this year.

The identified trends were supported in the second-quarter earnings calls of some big banks, which reported a drive to expand their credit card offerings.

Bank of America saw a strong quarterly increase in how many credit cards were issued.

The bank distributed 1.3 million new consumer credit cards in Q2, which was up from 2014’s Q2 1.1 million. The figure was also the highest number since the third quarter of 2008, according to BoA’s earnings release. Consumer banking deposits were up $33 billion, or 6 percent, from the year prior at $547 billion.

Offering up its latest quarterly report on the “Credit Card Landscape,” this time around for the second quarter of 2015, CardHub stated that rates were “fairly stable” with two exceptions: rates slipped (1.5 percent) for those consumers with excellent credit and rose (3.6 percent) for those with only fair credit from levels last year.

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