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Total loans at the 25 biggest U.S. banks comprise less than 46% of their combined assets, down from 54% this time last year. The figures provide a fresh reality check for an industry that’s been playing up its support for businesses and households as the Covid-19 pandemic ravages the economy. While the total amount that banks have loaned out has stagnated, the nation’s biggest lenders have rapidly expanded other parts of their businesses, such as their holdings of Treasuries and government-backed mortgage securities.
Lending has faced scrutiny during the pandemic as banks retrench, and small businesses and households find it harder to obtain reasonably priced credit. Large, publicly traded corporations have largely relied on bond markets to provide needed credit. Loans began accounting for less than half of big banks’ books for the first time last May, and in the 35 weeks since then lending has fallen to a fresh low 21 times.
