Loan Growth at Banks May Be Even Worse Than Recent Gloomy Numbers

Loan Growth

March 16, 2017 | By Rachel Louise Ensign

Some observers are worried about recent estimates that show loan growth at banks slowing down. Potentially making things worse: the real loan-growth numbers may be even more tepid, according to one analysis.

Bank loans across all categories are increasing 4.6% annually, the slowest pace since 2014, according to weekly Federal Reserve lending data from March 1.

But these Fed numbers often overstate the actual rate of business-loan growth across banks, according to an analysis from researchers at brokerage firm FIG Partners LLC. The researchers compared the Fed numbers with Federal Deposit Insurance Corp. quarterly call report data, which contains actual financial results submitted by all banks.

“It leads me to worry even more,” said Christopher Marinac, director of research at FIG Partners, since the trend could imply the actual business-loan numbers are even softer than the recent Fed estimates.

A number of factors are at play in the lending slowdown, including rising interest rates; bankers also said some business clients put borrowing on hold before the U.S. election and aren’t confident enough to jump back in.

Click here to read more. (Subscription may be required)