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US banks’ loans drop to another record low as deposits surge

Banks and investors around the world always have a need for dollar liquidity, but do not have direct access to the lending windows run by the Federal Reserve which guarantee US banks easy access to cash. Photo: Hemant Mishra/Mint (Hemant Mishra/Mint)Premium
Banks and investors around the world always have a need for dollar liquidity, but do not have direct access to the lending windows run by the Federal Reserve which guarantee US banks easy access to cash. Photo: Hemant Mishra/Mint
(Hemant Mishra/Mint)

  • Loans and leases slipped to 49.7% of total assets, the lowest reading in data going back to 1973
  • Home loans, as a share of total assets, fell to another all-time low

U.S. bank lending fell to a new low this month, Federal Reserve data show, as a cash-rich banking system continues its cautious approach to making new loans, Federal Reserve data show.

Total loans and leases dropped to 62.8% of bank deposits in the week ended March 10. Lenders use deposits to fund new credit for their customers. Total assets at U.S. banks climbed 0.7% to $21 trillion, according to the Fed.

Some highlights of their holdings:

  • The share of safe assets -- virtually risk-free investments such as cash, Treasuries and securities effectively guaranteed by the U.S. government -- ticked up to 35.6% from 35.5%.
  • Loans and leases slipped to 49.7% of total assets, the lowest reading in data going back to 1973.
  • Home loans, as a share of total assets, fell to another all-time low.

The Fed also reported the assets of large, small and foreign-related U.S. lenders. Here’s how their balance sheets compare on selected parameters:

  • At the 25 biggest U.S. banks, total assets rose 0.8% to $12.17 trillion.
  • Home loans and commercial real estate loans, as a share of total assets, fell to new record lows.
  • Loans and leases slipped to an all-time low when measured against deposits, or banks’ capacity to provide credit.

Here’s how big banks’ balance sheets have changed since the Fed’s previous weekly report:

  • The total assets of smaller and foreign-related banks rose 0.6% to $8.85 trillion.
  • Cash and commercial and industrial loans increased from the previous week.


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