NEW YORK–Loan growth appears to be “fading” for many small and midsize lenders, according to one new analysis.
Although loan growth has been setting records among credit union community has a whole, the Wall Street Journal reported that “weak loan growth has been one of the mysteries of the economic recovery in the past two years. It slowed significantly last year and rebounded, but only slightly, in the first half of 2018, topping out at just over 5% in late June. Commercial and industrial loans, which had been particularly sluggish, peaked at 6.5%, still well below the double-digit increases seen a few years ago.”
The Journal’s analysis found both metrics have since “decelerated,” with the latest figures showing outstanding C&I loans up 5.7% from a year earlier in the week through Aug. 14, with total loans up 4.7%.
“For a while now we’ve been waiting for loan growth improvement, and it’s been slow,” Barclays analyst Jason Goldberg told the Wall Street Journal, which noted “continued uncertainty over trade policy and higher interest rates are likely still holding things back.”
The Journal report said the “real pickup” in loan growth had been expected for big regional banks rather than the giant commercial banks, with the regional banks and their investors counting on strong loan growth to boost earnings.
A Morgan Stanley analysts said 13 of the 28 “midcap” banks it covers need to see a loan growth acceleration in the second half to meet their own full-year guidance.