Deposits at US commercial banks fell toward the end of April to the lowest in nearly two years, data released on Friday by the Federal Reserve showed, while overall credit provided by banks moved up, led by a record level of outstanding loans and leases.
Deposits on a nonseasonal adjusted basis fell in the week ended Apr 26 to about $17.1 trillion, a drop of about $120 billion from the week earlier.
That was the lowest level since June 2021, with deposits now having declined by more than $500 billion from the week before Silicon Valley Bank (SVB) collapsed in March.
After record deposit outflows immediately after the failure of SVB and smaller Signature Bank within days of each other, deposits had stabilized into early April. They picked up again in the latter half of April, a period that typically has large outflows from accounts as the annual tax filing season ends.
On a seasonally adjusted basis, which considers that pattern, deposits have changed little since the end of March.
At large US banks, deposits fell to $10.54 trillion from $10.61 trillion a week earlier on a nonseasonally adjusted basis. Deposits at small banks totaled $5.32 trillion, compared with $5.34 trillion.
Meanwhile, total banking system credit has yet to show the contraction many economists and policymakers anticipate developing after the recent turmoil of the Federal Reserve and aggressive interest rate increases over the past year. Regulators seized a third bank – First Republic – this week, and JPMorgan Chase & Co, the largest US bank, took over.
Total banking system credit rose for a second week to $17.37 trillion, led by an increase in loans and leases to a record high of $12.11 trillion, on a nonseasonal adjusted basis, from $12.07 trillion in the previous week.
Nevertheless, loan growth has flattened out in recent months: the annual growth rate has cooled from a double-digit pace late last year to about 9% as April ended, suggesting tighter conditions are beginning to temper bank credit.
