WASHINGTON–Loan growth at U.S. banks at the end of Q3 hit its lowest point since the end of 2013, according to data released by the FDIC.
The number has been a surprise to many analysts, who have projected lending at banks would continue to climb in step with U.S. economic growth.
The FDIC lending data also marks the sixth consecutive quarter for loan growth at banks.
The data show lending is down at banks across four major categories, including business lending, which is at its lowest level since the first quarter of 2011.
Nevertheless, while lending growth has slowed, overall lending balances continue to rise.
“The slowdown in lending growth raises questions about firms’ prospects for 2018, especially given that long-term interest rates haven’t moved much, even as short-term ones are climbing,” noted the Wall Street Journal in its analysis. “The difference, or spread, between 10-year and two-year U.S. Treasury debt, a rough proxy for bank profitability, is around 0.6 percentage point, its lowest level in a decade.”
Christopher Marinac, director of research at FIG Partners, told the Wall Street Journal, “The plane used to be flying at 30,000 feet, now it’s at 10,000. There are many banks that are concerned about how much they can grow the loan book in 2018.”
The Journal further reported that the FDIC data show that loan growth was “anemic” at many smaller banks.”
As CUToday.info is separately reporting today, new data from the CUNA Mutual Trends report show credit union loan balances rose 0.7% in September, slower than the 0.8% pace reported in September 2016.