Since 2009 there has been an ongoing repairing of the banks balance sheets. DB is out with a lengthy note this morning saying the banks are no longer deleveraging but are growing their balance sheets.
If the banks are growing this will gradually give more and more support to the U.S. economy and overall GDP.
Here’s a summary of DB’s main message on the U.S. Banks:
- Net charge-offs and loan loss provisions are currently 1/3 of what they were in 2009
- The net charge off rate is currently around 1%
- Banking sector net operating income has been very solid for the past nine quarters
- Net loans and leases trending down for both small and large banks
- The number of banks where construction loans exceed total capital is now 25% of what it was in 2008
- 51% of charge-offs in 2012Q1 was real estate loans
- Banking sector quarterly return on assets is back close to 2006-07 levels
- Credit card debt outstanding is close to 50% lower than in 2008
- Total credit growth has turned positive and is growing on a steady trend
- Similarly, total bank assets (i.e. both securities and loans & leases) are growing
- There is growing demand for C&I loans, both from small and large companies
- Banks are reporting more demand for commercial and residential real estate loans
- Banks are more willing to lend