Economic Report: Bank lending rises for first time in three weeks

by | Apr 14, 2023 | Stock Market

Lending by banks rose slightly last week pointing to some stabilization in the U.S. financial system one month after the failure of Silicon Valley Bank. Total bank lending rose by $10.2 billion to $12.08 trillion in the seven days ended April 5, the Federal Reserve reported Friday. Most of the increase took place at larger banks. This is the first increase in three weeks.

On the other hand, bank deposits rose by $61 billion last week to $17.3 trillion. Both large and small banks took in more than $20 billion in new deposits. Key details: Commercial and industrial loans rebounded by $6.6 billion last week to $2.8 trillion. These loans had tumbled by nearly $70 billion in a two-week span in late March after the failure of California-based SVB. All figures are taken from the Federal Reserve’s weekly H8 survey and are seasonally adjusted. The collapse of SVB in early March triggered a big outflow of deposits. Yet even before the failure of SVB, bank deposits had been shrinking as rising interest rates spurred customers to seek higher returns for their money, for instance, from money-market funds. Deposits peaked at a record $18.2 trillion in the spring of 2022 before starting to wane. They since contracted by almost $1 trillion. Economists predi …

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