Banks aren't lending to consumers; here's who is
Jeff Cox | @JeffCoxCNBCcom
Feb 18, 2015
Though bank lending to consumers has slowed to a near stop in recent months,
there is one place people can go to get a cash infusion.
Credit unions have seen a surge in lending, pushing the 2014 total to the
highest level since 2005 as the industry recovers from the financial crisis
slowdown, according to SNL Financial.
Loans and leases totaled $720.78 billion for the year, making a 10.4 percent
leap from 2013. That compares favorably to previous years, when the total
increased 7.9 percent in 2013 and just 4.5 percent in 2012. SNL reported that
the last time the industry saw double-digit gains was in 2005, ahead of a
crisis that saw a breakdown in the subprime market reverberate through the
entire industry and send the U.S. economy into the Great Recession.
Mortgages helped push the credit union gains, rising 9.1 percent for the
year, while new-vehicle loans accelerated 21 percent to $87 billion and
used-car loans rose 12.8 percent.
Analysts have been predicting a rise in nonbank lending as the industry
faces pressure from increasing regulation and a low interest rate environment
that is compressing margins. Credit unions are owned by members, generally
through businesses or trades, and provide multiple services similar to banks
but do not fall under Federal
Reserve regulation.
Net income also hit record levels at the nonprofit institutions, which
earned $8.87 billion for the year, an 8 percent increase and the highest level
since SNL began collecting credit union data going back to 1995.
In the aggregate, bank lending actually hit a record high for the year at
$8.31 trillion. However, the bulk of the gains came through a surge in
commercial and industrial loans (up 12.5 percent) and in money the banks loan
the federal government through Treasury purchases, which increased 11.9 percent
for the year and 30.9 percent in December alone, according to the Fed.
By comparison, consumer loans increased just 5.2 percent for the year, with
a sharp tail at the end. The category rose only 1.5 percent in December and was
up just 0.2 percent in January 2015. Residential real estate loans dropped 0.7
percent for the year and revolving home equity loans fell 4.1 percent.
To be sure, those figures mark at least less of a decline than seen in
previous periods. However, fourth-quarter earnings showed an industry relying
more and more on C&I loans for business and less on the consumer.
"The consumer has been the missing piece to the loan growth story since
the recession," analyst Gerard Cassidy at RBC Capital Markets told SNL.