Macro Trends To Support Greater Lending
BMI View: We expect US commercial banking sector client loan growth to accelerate in 2014, as stronger real GDP growth buoys consumer confidence and businesses increase investment to meet rising demand. Amidst a backdrop of rising interest rates and a reduction in quantitative easing, we believe banks will begin to shift their historically large cash assets into lending.
The US commercial banking sector remains broadly stable, and we expect lending portfolios to strengthen throughout 2014 on the back of falling delinquency and foreclosure rates, reflecting our view that the US economy is set to accelerate to 2.8% real GDP growth from 1.8% in 2013. We expect continued asset growth in the coming years, but note that this growth will be increasingly driven by growing private sector demand for credit in 2014 and 2015, rather than quantitative easing from the Federal Reserve (Fed), which has already begun slowing the pace of its asset purchases.
Asset Growth To Slow Over Multi-Year Period
|Asset Expansion To Accelerate On Stronger Real GDP Growth|
|US - Total Assets & Client Loans, % chg y-o-y (3-Month MA)|