May 17, 2023
Real estate loans rose at a 1.7% annual rate in April after climbing at a 3.7% pace in March and 8.9% in February. The year over year growwth rate is 10.1%. Thus, real estate loans had been growing at a solid double-digit pace through February, but they have slowed noticeably in March and April as the banking crisis emerged.
Meanwhile, commercial and industrial loans, which are more commonly called “business loans” fell at a 6.4% rate in April after declining at a 4.5% pace in March, and shrinking by 5.5% in March. They grew 14% in 2022. Growth slowed sharply in January and then fell sharply in February, March, and April as the banking crisis emerged. The slowdown was concentrated in C&I lending at small banks which plunged noticeably in March and April. C&I lending at large banks has been relatively flat since the end of last year.
Finally, consumer loans have continued to grow steadily. They rose at an 8.2% rate in both March and April. That brings the year-over-year increase to 8.8%. There has been some modest slowing in loan growth in this category, but it has not been hit like the C&I loans category.
As a resuly of the dramatic slowdown in the commercial and industrial loan category, total loan growth was essentially unchanged in April after having grown at a 2.9% pace in March and 5.1% in February. The year over year growth in total loans stands at 9.1%. But total loan grown has clearly slowed in the past couple of months, particularly for commercial and industrial loans, as the banking crisis at midsize banks has caused medium-sized banks to be more cautioius about their willingness — and ability — to make loans.