The first drop in US bank deposits in 4 weeks, what does that mean? Powered by Investing.com

Investing.com — Deposits and lending activity at U.S. commercial banks fell for the first time in four weeks in the week ended June 7, the latest Federal Reserve data showed, serving as a reminder that a recovery from spring banking turbulence still has some way to go.

Deposits at large US banks fell by $79.2 billion to $17.203 trillion from the previous week, seasonally adjusted, the largest drop since March and the first in four weeks.

Commercial bank lending decreased by $49.3 billion, to a seasonally adjusted $12.090 trillion, during the week.

Home loans rose $31.2 billion, commercial real estate loans rose $1.2 billion, while consumer loans increased $1.3 billion from the previous week. Commercial and industrial loans decreased by $13 billion from the previous week in a seasonally adjusted value.

“The data shows that the banking disruptions observed as of March 9, 2023 continue to negatively affect loans. Moreover, additional concerns were raised due to the statements of financial regulators, who mentioned the preparation of new regulations for US banks,” said Gabriela Seller Bagazza, director of economic and financial analysis at Banco Base.

The first decline in lending activity in four weeks comes as many continue to watch for more signs of tightening credit conditions that will dampen not only economic growth but also inflation. This, combined with expected new regulations for the US banking sector, could complicate the process of granting financing.

These regulations could lead to an increase of up to 20% in capital requirements, which could further affect the ability of banks to make loans and restrict access to credit for consumers and businesses.

With information from Julio Sánchez Onofre