Monday, December 31, 2012

US credit expansion driven by corporate lending

2012 was marked by significant credit expansion in the US, as loans and leases on domestic banks' balance sheets hit a new post-recession high. Here is a quick overview of recent lending trends.

Loans and leases in bank credit; domestically chartered commercial banks; seasonally adjusted (source: FRB)

A great of that expansion has been driven by corporate loans, where credit expansion started in early 2011. Although the Fed doesn't break down this measure by company size, anecdotal evidence suggests that this credit growth is concentrated in large company lending. Small business loan growth has apparently been much more modest.

Commercial and industrial loans; domestically chartered commercial banks; seasonally adjusted (source: FRB)

Commercial real estate lending remained subdued as CMBS pools have been hitting their maturity wall (see discussion). It seems however that commercial loan balances are stabilizing.

Commercial real estate loans; domestically chartered commercial banks; seasonally adjusted (source: FRB)

Residential mortgages held by banks grew in 2012, although most have been sold to the US government (GSEs). The recent spike is likely to be temporary as the newly originated loans await sales into the agency pools.

Closed-end residential real estate loans; domestically chartered commercial banks; seasonally adjusted
(source: FRB)

Consumer credit did not expand except for student loans (although auto loans saw some growth), as Americans held back on using credit cards.

Consumer loans: credit cards and other revolving plans; domestically chartered commercial banks; seasonally adjusted (source: FRB)

One area where credit contraction continued unabated is in home equity loans. This has been driven by low home equity values, tighter credit requirements, and lack of demand from homeowners.

Revolving home equity loans; domestically chartered commercial banks; seasonally adjusted (source: FRB)



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