Least Lending by US Banks in 5 Years: JPMorgan Chase & Co. (JPM), Wells Fargo & Company (WFC)

Similarly, Citigroup Inc. (NYSE:C) reported a decline in its loan-to-deposit ratio from 76% in 2011 to 70% at the end of the recent year. This is the lowest for Citigroup in five years. At America’s third largest bank by assets, average deposits increased 9% in its retail unit, while commercial loans increased 23%. The bank is aggressively pursuing an expense reduction program to improve its bottom line.

The loan-to-deposit ratio at Wells Fargo & Company (NYSE:WFC) remained unchanged from the previous year at 84%, however, unlike its peers, Wells Fargo is keen to make new loans, says the bank’s spokesman. The bank posted strong figures when it reported its fourth quarter performance. While it is already considered America’s largest home lender, Wells Fargo’s diversified business model and the growth in its deposits and loans are considered to be the reasons for such outperformance during 2012. The bank reported an average loan portfolio of $787.2 billion at the end of the fourth quarter, up 135 basis points over the linked quarter. Its core deposits grew 3.7% to $928.8 billion over the same time period.

Conclusion

I believe the top large US banks are missing on a big opportunity due to their reluctance to lend. I further believe this drag on lending will continue until interest rates rise. However, Wells Fargo’s eagerness to make new loans will result in the bank’s outperformance during the coming quarters. Therefore, I am bullish on Wells Fargo.

The article Least Lending by US Banks in 5 Years originally appeared on Fool.com and is written by Adnan Khan.

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