Treasury Releases Bank Lending Survey

easury Department has released results from its monthly bank lending survey for May with data from the top 21 recipients of government investments through the Capital Purchase Program (CPP). The survey found that outstanding loan balances were flat in May, and there was modest growth in new loan originations in the 21 banks surveyed. The economic environment in May, against which banks reported their lending and intermediation activities, experienced further deterioration, despite modest improvement in a number of indicators, the Treasury says. The lending survey results show that total outstanding consumer loans (i.e., the total of outstanding loans in all four consumer categories – first-lien mortgages, home equity lines of credit, credit card loans and other consumer loans) of all respondents were flat in May. Consumers focused on paying down debt, driving the decreases in outstanding balances held by major banks, the department notes. In the commercial real estate (CRE) sector, the May survey results point to continuing poor market conditions and general caution by businesses. CRE loan balances at the 21 banks surveyed fell by 1%, 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. Total originations of loans by all respondents rose in four categories: mortgages, credit card loans, commercial real estate renewals and commercial real estate new commitments. Total originations fell in the following three loan categories: home equity lines of credit, other consumer lending products, and commercial and industrial renewals. Originations were flat in one loan category: commercial and industrial new commitments. Total originations of all loans (by all 21 respondents) increased by 1%. Fourteen banks posted increases in originations, and seven banks posted declines. SOURCE: T

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