OfflineOver the past few months, quietly, the banks have turned on the lending spigot. Growth is still modest and is weighted toward the strongest corporate and consumer borrowers. However, after several quarters of flat or lower loan balances, several of the nation’s biggest banks are reporting increases.
On Monday, Citigroup officials reported that the bank recorded loan growth compared with a year ago. This growth was in all of its businesses during the third quarter and in their businesses around the world. Wells Fargo announced new loan commitments to small businesses were up 8 percent, while lending to larger companies has been growing for 14 months in a row.
Across the country, analysts expect an increase in credit card loan balances before the end of the year. Wells Fargo’s chief financial officer, Timothy J. Sloan, says: “The narrative that banks aren’t lending is incorrect. Lending is strong, and based on what we’re seeing, it will continue to grow.”
Reasons given for this increase in lending include more customers taking advantage of very low interest rates and borrowers in need of cash drawing on their credit lines.
It's interesting how the media paints a picture of banks not lending any money. Although money is not as easy to come by as it was a few lears ago, people need to realize that this is how banks make money. If they aren't making loans, they aren't making an interest spread and therefore aren't making any returns.
Banks are always lending, and always will lend. That's what they do! The main question is what are their criteria, and what does it take to get their money. Then we go out there and fill in the gaps as to what we need to get the bank to act.