Bank Lending Starts to Bloom; Bank lending Is trending toward faster growth after a long slowdown
While much of the country spent the first three months of 2014 sheltering against snow and ice, banks began to fire up the lending furnaces.</br></br>That is welcome news for bank investors. Loan growth has been the missing ingredient for banks for some time. Without it, they have been left to try to bolster earnings through repeated rounds of cost cutting and reversals of loan-loss reserves, even as the Federal Reserve's superlow interest rate policy has weighed heavily on margins.</br></br>While loan growth seen in the first quarter isn't yet strong enough to suggest banks are anywhere near out of the woods, it does provide some reason to hope the lending environment is improving. And it could bode well for banks' coming first-quarter results, especially as firms continue to grapple with lower mortgage-origination activity.</br></br>Not that any lending gains have been immediately apparent. In the first quarter through the third week of March, the latest date for which Federal Reserve data are available, overall bank loans grew from a year earlier at an average of 2.5%.</br></br>The pace is the same as seen in the final quarter of 2013. While this at least marked stabilization following a long period of declining rates of loan growth, it wasn't anything for bank investors to write home about.