This reinforces a trend during the pandemic that has seen less and less trust in borrowers, according to the report.
The total loans of the 25 largest US banks represented less than 46% of their combined assets. That’s down from 54% year-over-year, Bloomberg noted.
The current numbers, Bloomberg reported, are the lowest in nearly 36 years of weekly data from the Fed.
Newly released data shows the realities of the industry as it emphasizes supporting businesses and households during the pandemic. Bloomberg reported that the total amount banks loaned has hit a snag, but America’s biggest lenders have boosted other aspects of their business like Treasury holdings and government-guaranteed mortgage securities.
According to Bloomberg, loans have declined by just over 1% since last year, this figure including new loans ultimately guaranteed by the Small business management (SBA). The big banks’ balance sheets widened, however, increasing 17% to $ 12 trillion as the Fed put in liquidity. The banks kept some of the funds in cash, using the rest to help buy federally guaranteed securities.
In August, PYMNTS reported that banks were enacting stricter lending requirements for businesses and households for categories of residential mortgage loans (RREs), auto loans, credit card loans and other consumer loans.
Banks said at the time that their standards and conditions for industrial loans to businesses had been tightened, and they said the standards had been tightened for many consumer mortgage loans. The reasons included an uncertain economic outlook and worsening industry-specific problems.