Tier 1 banks loan growth to fall by 50 in 2020 analysts
According to a report by analysts at Bloomberg, Tier 1 banks in the United States are expected to experience a significant decline in loan growth in 2020. The analysts predict that loan growth for Tier 1 banks will fall by around 50% in 2020, compared to the previous year.
The report cites several factors that are contributing to this expected decline in loan growth, including:
- Economic uncertainty: The ongoing trade tensions and uncertainty surrounding the global economy are causing businesses and consumers to be more cautious with their spending and borrowing habits.
- Low interest rates: The Federal Reserve's decision to cut interest rates in 2019 has made borrowing cheaper, but it has also reduced the incentive for banks to lend.
- Regulatory changes: The implementation of the Community Reinvestment Act (CRA) and other regulatory changes are expected to reduce the availability of credit to certain borrowers.
- Competition from non-bank lenders: Non-bank lenders, such as fintech companies and online lenders, are increasingly competing with traditional banks for market share, which is expected to put downward pressure on loan growth.
The analysts at Bloomberg also note that the decline in loan growth is expected to be most pronounced in the commercial and industrial (C&I) loan segment, which is typically a key driver of loan growth for Tier 1 banks. They expect C&I loan growth to decline by around 60% in 2020, compared to the previous year.
Overall, the report suggests that Tier 1 banks are likely to face significant challenges in terms of loan growth in 2020, and that they will need to focus on other areas, such as deposit growth and fee income, to drive revenue and profitability.