How Has The Total Loan Portfolio Of The Largest U.S. Banks Changed Over The Last 5 Quarters?

The loan portfolio for the five largest U.S. banks have grown by just under 6% over the last five quarters. While JPMorgan reported a sharp 11% jump in loans over this period, Bank of America’s loan portfolio only grew by 2% as the bank continues to work its way through its legacy mortgage portfolio. On the other hand, total loans for Citigroup shrunk over the period as the geographically diversified bank divested some of its retail banking units in low-profit regions even as negative exchange rate movements hurt the loan base.

Notably, these 5 banks are responsible for roughly 41% of all outstanding loans for U.S. banks (domestic as well as foreign). Details about the current domestic and foreign loans outstanding for each of these banks can be found in our previous article.

Loans for U.S. commercial banks have seen considerable growth since 2010 as the U.S. economy recovered from the downturn. Growth rates were aided by the Fed’s decision to maintain interest rates at record low levels over 2009-15. The 25 basis point rate hike last December did not weigh on loan growth, as steady economic growth continued to fuel the demand for new loans – especially commercial loans. The Fed is likely to keep the interest rate low for the rest of the year given weak global macroeconomic cues, because of which we expect the loan portfolio across U.S. banks to continue their brisk growth rate in the near future. But once the regulator resumes the rate hike process early next year, there should be a noticeable reduction in the rate at which loans grow.

You can see how changes to JPMorgan’s commercial banking loan portfolio affects our price estimate for the bank by modifying the chart below.

See full Trefis analysis for U.S. Bancorp | Wells Fargo | JPMorgan | Bank of America | Citigroup

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