Big U.S. Banks Cut Loans to Record Low, Again, as Deposits Jump

The 25 biggest U.S. banks collectively reduced their loan holdings by 8% in the year through March, according to the Federal Reserve’s latest weekly survey.

Total loans fell by $447 billion to $5.45 trillion, Fed data show. Meanwhile, total deposits, which provide the funds that banks lend out to borrowers, jumped 16% to $10.13 trillion. Their combined loan-to-deposit ratio now sits at 53.9%, the lowest reading in 36 years of weekly Fed data.

Had the largest U.S. banks maintained their lending level of this time last year, they’d have an additional $1.37 trillion of loans on their books today.

Some highlights of all U.S. banks’ holdings:

  • The share of safe assets -- virtually risk-free investments such as cash, Treasuries and securities effectively guaranteed by the U.S. government -- slipped to 35.6% in the week that ended March 31 from 36.0% the previous week.
  • Total assets ticked down slightly to $20.91 trillion from $21.04 trillion.
  • Loans across the U.S. banking industry comprise less than half of their total assets, continuing a post-pandemic trend.
Big U.S. Banks Cut Loans to Record Low, Again, as Deposits Jump

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:

Big U.S. Banks Cut Loans to Record Low, Again, as Deposits Jump

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

Balance Sheet ItemThis Week, $ BnPrev Week, $ Bn% of Total Assets, Latest Week% of Total Assets, Year Before% pt Change from 5Y Avg
Cash1839.8186015.310.74
Agency Mortgage-Backed Securities1968.41970.616.314.42.4
Residential Real Estate Loans1400.11411.211.613.1-3
Commercial Real Estate Loans749.7749.76.26.8-1.1
Consumer Loans1079.91074.399.9-1.4
Commercial and Industrial Loans1282.71292.910.613.8-1.9

Here’s how smaller and foreign-related banks’ balance sheets have changed since the previous report:

Balance Sheet ItemThis Week, $ BnPrev Week, $ Bn% of Total Assets, Latest Week% of Total Assets, Year Before% pt Change from 5Y Avg
Cash1653.71770.218.717.22.6
Agency Mortgage-Backed Securities737.3724.88.371.2
Residential Real Estate Loans818.7813.49.29.8-1
Commercial Real Estate Loans1665.81663.818.819.1-0.8
Consumer Loans459.6457.95.25.5-0.5
Commercial and Industrial Loans12841291.314.514.70.4

©2021 Bloomberg L.P.

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