US Banks See Decline in Total Assets
According to a recent report by S&P Global Market Intelligence, the largest banks in the US are experiencing a decline in total assets, particularly in deposits held at these banks.
This decline in assets marks the fourth time in the last five quarters that the banking industry has seen such a decrease. The top 50 banks in the country saw a staggering $254.5 billion decline in aggregate assets from the previous quarter, with more than half of them (28 banks) reporting sequential declines.
Interestingly, there was a significant contrast in performance between the larger and smaller banks. JPMorgan Chase & Co., the largest bank in the US, reported a 2.7% decrease in assets. Bank of America Corp., Citigroup Inc., and Wells Fargo & Co. also saw declines of 2.2%, 1.3%, and 0.5% in their respective assets.
In contrast, smaller banks seemed to fare better during this period. Out of the 35 banks with assets ranging from $50 billion to $500 billion, 18 of them reported asset growth.
The report did not explicitly discuss the impact of savings rates on declining assets, but it raises questions about whether this could be a contributing factor. Many big banks, including systemically important banks, have not passed on higher interest rates to their account holders. This has created an opportunity for Fintech companies and other banks to attract customers and gain assets. It would be interesting to see if S&P releases a report on interest rates in the future.
Overall, it is evident that the US banking industry is facing challenges in maintaining their total assets. As banks continue to adapt to changing market dynamics, it remains to be seen how they will handle these difficulties and regain asset growth.
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