Mortgages Make Up 30% Of Total Loans For Largest U.S. Banks

by Trefis Team
U.S. Bancorp
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The five largest U.S. banks have notably different areas of focus when it comes to lending, with Wells Fargo concentrating considerably on mortgages, while Bank of America and Citigroup target growth primarily in the commercial lending and credit card segments respectively. This is made clear from the table below, which details the loan portfolios of these banks by loan category.

The figures above are at the end of Q3 2017 as compiled by from quarterly call reports filed by the individual banks. The highlighted numbers in each row above show the bank with the most outstanding loans in a particular category. All Other loans include loans to financial institutions as well as the lending of federal funds and reverse repurchase agreements.

Notably, in terms of the composition of loans for each of these banks, residential mortgages have the largest share of the loan portfolio of the five largest U.S. banks taken together – making up over 30% of total loans. This is well above the average figure of 23% for the U.S. banking industry as a whole, and highlights the concentrated nature of the mortgage industry with these five players garnering a sizable market share.

Citigroup stands out here as the bank with the lowest proportion of residential mortgages in its loan portfolio. In fact, mortgages make up less than the industry average figure of 23% for the geographically diversified banking giant. This can be explained by the fact that Citigroup sold off chunks of its mortgage lending operations in the U.S. after the downturn (including the sale of OneMain Financial in early 2015). Although the bank has worked its way through its legacy mortgage portfolio and is now looking to originate more mortgages, poor industry conditions have hurt the bank’s progress.

The chart below captures our forecast for Citigroup’s consumer lending portfolio, which includes its mortgage unit. You can see how changes to this affects our $75 price estimate for the bank by modifying this chart.

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