Here are some updates to the recent discussion on loan growth weakness relative to rising deposit balances at US commercial banks (see post).
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1. Loan growth rate in the US, while better than in the Eurozone, remains on a downward path. The latest figures suggest that loans are increasing at less than 2%, while deposits continue to grow at 6-7% per year.
2. Loan-to-deposit ratio in the banking system hit a 35-year low recently.
3. Loans as a percentage of banks’ total assets are at 52.2% – the lowest level on record. Just to put this into perspective, here is the breakdown of bank assets now vs. 10 years ago.
|Source: FRB (note that derivatives and trading assets were not tracked separately 10 years ago)|
|Source: FRB (note that the bulk of “cash” assets are excess reserves held with the Fed)|
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