How Much Of Total U.S. Deposits Are Held By The Country’s Five Largest Banks?
The 5 largest U.S. banks held deposits worth ~$5.1 trillion worldwide in Q3 2016, with more than $4.1 trillion of these deposits being in the U.S. While JPMorgan has the largest overall deposit base among U.S. banks, Wells Fargo has the largest deposit base in the country.
The figures above represent average deposits for each bank over Q3 2016, as detailed in their latest SEC filings. The proportion of deposits in the U.S. is based on individual disclosures by the banks about foreign deposits at the end of the period. The total deposit base for all U.S.-based banks is as compiled by the FDIC.
The table below focuses on the market share of each of these banks in the U.S. in terms of total deposits held in the country. Notably, Wells Fargo, Bank of America and JPMorgan Chase together 30% of all deposits in the U.S. – reflecting the sheer size of these banking giants. Although Citigroup also has a comparable deposit base globally, the bank’s more geographically diversified business model holds more deposits in foreign branches than it does in the U.S.
Total deposits for the five largest U.S. banks have grown by almost 5.4% over the last five quarters. Although this is sizable growth given the massive deposit base managed by these banks, it is slightly below the 5.9% growth in total deposit base for all U.S. banks over the same period. This difference is primarily due to sluggish growth in deposit base for Bank of America and Citigroup over recent quarters as negative exchange rate movements negatively impact the value of their foreign deposits in dollar terms.
Deposits across U.S. commercial banks have grown sharply since 2010 due to the prevailing low interest rate environment since the economic downturn. This is because the resulting lack of lucrative investment options forced investors to shift a bulk of their liquid assets into interest-bearing deposits. Although the Fed hiked benchmark interest rates by 25 basis points last December, the interest rate environment has yet to show any palpable signs of improvement. The Fed is likely to keep the interest rate low for the rest of the year given weak global and domestic macroeconomic cues. But once the regulator resumes the rate hike process early next year, it will open up better investment options for individuals as well as institutions – drastically reducing the deposit growth rate.
The chart below shows U.S. Bancorp’s total deposit base over the years and our forecast for it going forward. You can see how changes to this figure affects our price estimate for the bank by modifying the forecast.
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