Bank Balance Sheet Trends: A Shift in Asset Mix

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📊 Bank Balance Sheet Trends: A Shift in Asset Mix

Latest data from U.S. commercial banks shows some clear shifts in how balance sheets are evolving:

✅ Strong Growth

• Other Loans & Leases: +15.1% YoY → fastest-growing category, reflecting demand outside of real estate and consumer credit.

• Other Assets: +9.0% YoY → buildup of miscellaneous financial assets.

• Treasury & Agency Securities: +7.3% YoY → banks are increasing their safe asset holdings.

⚖️ Moderate but Stable

• Commercial & Industrial Loans: +4.1% YoY → businesses still borrowing, but at a measured pace.

• Credit Cards & Revolving Loans: +2.9% YoY → steady consumer demand, though below overall loan growth.

• Residential & Commercial Real Estate Loans: both <2% YoY → housing and CRE lending remain subdued under higher rates.

❌ Declining Categories

• Cash Assets: -2.3% YoY → banks are drawing down liquidity to redeploy into securities and loans.

• Other Securities: -0.8% YoY → contraction despite small recent gains.

• Other Consumer Loans: -2.5% YoY (discontinued series) → weakness in non-auto, non-credit card borrowing.

🔎 Takeaway
Banks are reducing cash and reallocating into loans and Treasuries, seeking yield in a higher-rate environment. But real estate lending is stagnating, highlighting the pressure of elevated interest rates on both residential and commercial property markets.

The balance sheet tells the story: short-term and flexible credit is in demand, while long-term real estate exposure is being held back.