U.S. banks are seeing a surge in the number of loans being taken out by corporate America, with new data showing the biggest increase since the 2016 election.
According to the Financial Times, the data published on Friday shows only one month of recovery, but is still giving bankers hope that businesses across the country are slowly becoming more willing to take on more debt.
The Federal Reserve data shows that commercial and industrial loan balances increased at a seasonally adjusted rate of 9.3 percent last month and hit a record $2.13 trillion.
“You saw a decent pick-up in March, and we’re seeing that in our pipeline,” said Bill Demchak, chairman and chief executive of PNC Financial Services, the sixth-biggest U.S. retail bank by assets. “That should set us up well for the rest of the year.”
Other big banks are also optimistic about the future. John Gerspach, Citigroup’s chief financial officer, said the “best is yet to come," while Marianne Lake, chief financial officer at JPMorgan Chase, said the bank was “expecting growth in the mid-single digits” in commercial and industrial loan balances for the year. They rose 5 percent in the first quarter compared with a year ago.
But Lake added that the bank would “continue to be very selective and cautious,” especially in commercial real estate, where “pricing has become fiercely competitive.”
The boost from the GOP’s tax reform seems to be taking effect, with the rate of growth higher than 3 percent just two months since the vote.
Last month, a survey of corporate treasurers by TD Bank found that 42 percent of professionals said they believe tax reform will lead to significant economic benefits for their organizations, while more than a quarter (28 percent) of treasurers with cash abroad said they will repatriate income back into the U.S. as a result of tax reform.
Bank professionals also believe the legislation will help them, with 58 percent saying they believe it will positively impact their business, while more than a third (37 percent) believe it will benefit their companies’ financial performance.