U.S. bank lending picks up slightly for second straight week

MW U.S. bank lending picks up slightly for second straight week

By Greg Robb

Deposits rise $

The numbers: Total bank lending climbed slightly by $1.2 billion to $12.1trillion in the seven days ending May 24, the Federal Reserve reported Friday. This is the second straight weekly increase.

Total bank deposits, meanwhile, rose by $86.5 billion last week to $17.2 trillion. Deposits had fallen earlier this month to the lowest level in almost two years.

Key details:

Commercial and industrial loans -- a key economic driver -- fell slightly to $2.8 trillion. These loans are still near a record high.

All figures are taken from the Federal Reserve's weekly survey and are seasonally adjusted.

Big picture: Banks and bank lending remain a concern after the collapse of Silicon Valley Bank in March and the seizure and sale of First Republic Bank earlier this year.

In the first quarter, U.S. banks lost a record $472 billion in deposits, according to Federal Deposit Insurance Corp data released earlier this week.

FDIC Chair Martin Gruenberg said the full extent of bank woes might not be known until the summer. Banks "face significant downside risks from the effects of inflation, rising market interest rates, slower economic growth, and geopolitical uncertainty, "he said, at a briefing.

Some banking leaders, including Jamie Dimon at JPMorgan Chase $(JPM)$ also expect banks to lend less aggressively, but so far signs of a credit crunch are few and far between.

"The feared credit crunch is not materializing quickly, and very much appears to be at best a slow burn rather than a sudden stop," said Tim Duy, chief U.S. economist at SGH Macro Advisors, in a note to clients.

In an interview with MarketWatch. Philadelphia Fed President Patrick Harker said that credit tightening is not very "significant" in his district.

Market reaction: The Dow Industrial Average closed over 700 points higher Friday after the May jobs report. The yield on the 10-year Treasury note declined 12 basis points for the week to 3.69%.

-Greg Robb

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

June 02, 2023 16:55 ET (20:55 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.