The Five Largest U.S. Banks Hold More Than 40% Of All Deposits
Total deposits for the five largest U.S. banks have grown by 4.3% over the last twelve months – above the industry-wide growth figure of under 4%. This is a commendable feat by these banking giants, given their massive deposit base which averaged more than $5.3 trillion in Q3 2017. This represents a share of more than 40% of the $13.2 trillion U.S. deposit market, and this figure is likely to trend even higher as the largest banks continue to outperform the overall industry.
We maintain a price estimate of $55 for U.S. Bancorp’s shares, which is slightly ahead of the current market price.
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 led investors to shift some of their liquid assets into interest-bearing deposits – leading U.S. deposits to swell at well above 5% annually over 2012-16. With the Fed hiking benchmark interest rates by 25 basis points on five occasions since December 2015, the interest rate environment has finally begun showing signs of improvement. This, in turn, has tempered the deposit growth rate over recent quarters.
That said, the largest U.S. banks continue to grow at a faster rate than the industry. Notably, JPMorgan’s particularly strong growth figure of 7% over the last few quarters helped it become the largest bank in the country in terms of total U.S. deposits in early October – surpassing Bank of America, which has held that position for more than two decades. Wells Fargo’s deposit growth has been depressed due to the string of scandals involving the bank’s employees that have come to light since last September, while the figures for Bank of America and Citigroup were negatively impacted by unfavorable exchange rate movements which weighed on their foreign deposits in dollar terms.
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.
See full Trefis analysis for U.S. Bancorp | Wells Fargo | JPMorgan | Bank of America | Citigroup
View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research