The Wall Street Journal reports that, U.S. banks have made it easier for lots of American citizens and firms to get loans in 2014. Banks are boosting lending activity at an accelerating pace after the financial crisis. It enabled the U.S. lending institutions to raise hefty profits.
As of Q2 2014, the net profit of the U.S. banking system totaled $40.24 billion which has been the second biggest score for the last 23 years. For the reference, the historical net profit record was broken in Q1 2013 which was slightly over $40.36 billion.
The total amount of loans given in Q2 2014 exceeds $8 trillion being the new tally since 1991 when SNL Financial, a research group, launched its surveys. Such high prints of the U.S. lending institutions are partly due to the fact that banks make smaller deductions to reserve funds for recovery of credit losses because of robust economic growth. Commercial lending has risen 12.6% annually. Currently, the lending pace is 6% higher compared to 3% a year ago.
Nowadays, the overall state of affairs in the U.S. economy looks upbeat. Washington reported that the labor market has approached its pre-crisis level having gained almost 80% recovery. Meanwhile, market participants concern about some financial data from lending institutions. It means that the banking sector faces a variety of problems such as increasing charges amid changes in the watchdog’s powers, low interest rates, falling yields of shares, and sharp slowdown in mortgages.
Taking the above-mentioned reasons into account, KBW bank, a stock index monitoring capitalization of 24 U.S. lending institutions, has dropped 0.9% since early 2014 whereas Standard & Poor's 500 has leapt 4.8%.
