US banks post solid third-quarter loan growth

Business Recorder reported that large American banks grew both lending and deposits over the third quarter, though lenders are paying more to keep customer funds in a competitive, high-rate setting. JPMorgan Chase, Citigroup and Wells Fargo each recorded higher net interest income, and Bank of America, the second-largest US lender, did the same. Those results came as investors feared high bond yields and costly borrowing could weigh on loan demand and prompt depositors to withdraw funds.

Citigroup reported average deposits up 11 percent and average loans 12 percent higher. Wells Fargo said deposits climbed 10.7 percent, while loans rose 11 percent with support from its consumer banking unit. JPMorgan, the largest US lender, saw deposits rise 4 percent and loans increase 2 percent from a year earlier. Bank of America posted 2 percent growth in average deposits and 6 percent in average loans and leases.

Margins are under pressure because Treasury yields rose in the third quarter, prompting customers to seek higher returns elsewhere and forcing banks to lift deposit rates. JPMorgan's deposit margin slipped to 2.78 percent from 2.79 percent a year earlier, while Wells Fargo's net interest margin, measured on a taxable footing, dropped to 2.43 percent from 2.61 percent. Analysts said there was no significant deterioration in credit quality so far, though Wells Fargo and Citigroup boosted reserves against possible loan losses during the quarter.