US bank lending increased last week, suggesting some stabilisation in credit conditions despite tighter loan standards and high borrowing costs as interest rates continued to climb in the country.
Commercial bank lending rose $10.4 billion in the week ending May 17 to a three-week high, according to seasonally adjusted data from the Federal Reserve out on Friday. On an unadjusted basis, loans and leases increased $2.3 billion.
Bank deposits rose by $30 billion during the same period. The advance was broad across institutions of varying size. On an unadjusted basis, deposits increased $32.9 billion.
To gauge credit conditions, economists are closely monitoring the Fed’s so-called H.8 report, released weekly, which provides an estimated aggregate balance sheet for all commercial banks in the US.
The biggest 25 domestic banks account for almost three-fifths of lending, although in some key areas – including commercial real estate – smaller banks are the most important providers of credit.
The latest data comes amid a banking crisis in the US. Three big banks collapsed in the US in recent months raising doubts about the stability of the banking sectors in the world's largest economy.
These include Silicon Valley Bank, First Republic Bank, which was acquired by JP Morgan Chase and Signature Bank.
However, Federal Reserve chairman Jerome Powell said the banking crisis that has hit US markets has “broadly improved” since Silicon Valley Bank collapsed in early March.
Conditions have “broadly improved since early March,” he told reporters after the Fed raised its interest rates by 25 basis points earlier this month.
Mr Powell said it was typically not good policy for big banks to acquire midsized ones such as First Republic.
But he believed JPMorgan's acquisition of First Republic was an exception and “a good outcome for the banking system”.
As a result of the acquisition, all depositors of First Republic become depositors of JP Morgan.
“I don't have an agenda to further consolidate banks,” Mr Powell said. “I personally have long felt that having small, medium and large-sized banks is a great part of our banking system.”
The US Federal Reserve this month once again raised interest rates, marking its 10th consecutive increase as it aims to rein in inflation.
The Fed bumped up the policy rate for a third consecutive time this year by 25 basis points as it seeks to bring inflation down to its target range of 2 per cent.
With inputs from Bloomberg.
The specs: 2018 Mercedes-AMG C63 S Cabriolet
Price, base: Dh429,090
Engine 4.0-litre twin-turbo V8
Transmission Seven-speed automatic
Power 510hp @ 5,500rpm
Torque 700Nm @ 1,750rpm
Fuel economy, combined 9.2L / 100km
Mohammed bin Zayed Majlis
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4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
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EA Sports FC 26
Publisher: EA Sports
Consoles: PC, PlayStation 4/5, Xbox Series X/S
Rating: 3/5
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
The specs
Engine: 2.9-litre twin-turbo V6
Power: 540hp at 6,500rpm
Torque: 600Nm at 2,500rpm
Transmission: Eight-speed auto
Kerb weight: 1580kg
Price: From Dh750k
On sale: via special order
How will Gen Alpha invest?
Mark Chahwan, co-founder and chief executive of robo-advisory firm Sarwa, forecasts that Generation Alpha (born between 2010 and 2024) will start investing in their teenage years and therefore benefit from compound interest.
“Technology and education should be the main drivers to make this happen, whether it’s investing in a few clicks or their schools/parents stepping up their personal finance education skills,” he adds.
Mr Chahwan says younger generations have a higher capacity to take on risk, but for some their appetite can be more cautious because they are investing for the first time. “Schools still do not teach personal finance and stock market investing, so a lot of the learning journey can feel daunting and intimidating,” he says.
He advises millennials to not always start with an aggressive portfolio even if they can afford to take risks. “We always advise to work your way up to your risk capacity, that way you experience volatility and get used to it. Given the higher risk capacity for the younger generations, stocks are a favourite,” says Mr Chahwan.
Highlighting the role technology has played in encouraging millennials and Gen Z to invest, he says: “They were often excluded, but with lower account minimums ... a customer with $1,000 [Dh3,672] in their account has their money working for them just as hard as the portfolio of a high get-worth individual.”
Killing of Qassem Suleimani
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
Killing of Qassem Suleimani
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
The five pillars of Islam
Silent Hill f
Publisher: Konami
Platforms: PlayStation 5, Xbox Series X/S, PC
Rating: 4.5/5
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
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