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Treasury Releases June Monthly Bank Lending Survey
WASHINGTON— The U.S. Department of the Treasury today released results from its monthly bank lending survey for June with data from the top 22 recipients of government investments through the Capital Purchase Program (CPP). 1. The June survey found that outstanding loan balances fell 1 percent in June and new loan originations in all 22 banks surveyed rose by 13 percent.
The lending survey results show that total originations of loans by all respondents rose in five categories (mortgages, HELOC, C&I renewals and new commitments, and CRE renewals) and fell in three loan categories (credit cards, other consumer lending products, and CRE new commitments). Total originations of all loans (by all 22 respondents) increased by 13 percent. The increase in originations was driven largely by increases in new home purchases and seasonal renewals in C&I and CRE lending.
Total outstanding consumer loans (the total of outstanding loans in all four consumer categories – first lien mortgages, home equity lines of credit (HELOC), credit card loans, and other consumer loans) of all respondents fell 1 percent in June. Households are facing growing pressures from a weakening labor market and the recent declines in their wealth. In this context, consumers focused on paying down debt and reducing spending, driving the decreases in outstanding balances held by major banks.
As with consumer loans, the outstanding stock of total commercial and industrial (C&I) loans fell 2 percent in June. Banks reported that demand by businesses for C&I loans was well below normal levels. This decline was attributed to lower demand among businesses for capital expenditure loans and for loans to finance acquisitions, plants, equipment, inventories and accounts receivables. As firms continue to downsize, cut costs, and reduce inventories, banks predict that lower demand will persist through the third quarter of 2009.
In the commercial real estate (CRE) sector, the June survey results point to continuing poor market conditions and general caution by businesses. CRE loan balances at these 22 banks fell by 1 percent, and banks reported that demand for CRE loans remained well below normal levels as businesses continue to focus on strengthening their balance sheets, reserving for future losses, and downsizing. Additionally, the lower demand for new loans reflected a surplus in the market, as the supply of office space has increased due to firms downsizing and office vacancies rising.
Small business lending showed growth in June. The total outstanding balance of small business loans decreased by 1 percent in June, but total small business loan originations increased by 26 percent. As most small business originations are included in either C&I or CRE originations (renewals plus new commitments), this trend is in line with overall trends in C&I and CRE originations in June.
Through the CPP, Treasury invests in viable banks to stabilize the financial system by building up the capital bases of banks, enabling continued lending and economic recovery. Strong capital levels enable banks to continue to play their vital roles as providers of credit to businesses and consumers. Since the inception of the CPP, Treasury has funded 665 banks of all sizes in 48 states, Puerto Rico and the District of Columbia.
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- Tables
- The
Monthly Lending and Intermediation
Snapshot, 08/17/09
- Individual
Banks' reports, 08/17/09
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With
about $4.2 trillion in net
loans and leases outstanding
in March 2009, these
banks account for more than
half of the net loans and leases
outstanding in depository institutions.
