New Numbers Reveal Massive Deposit Flight from US Banks
A recent report from S&P Global has disclosed a significant decline in non-brokered deposits, which mainly come from retail customers, in the US banking system. The third quarter of 2023 marked the sixth consecutive quarterly drop in total non-brokered deposits, falling from $17.430 trillion to $17.256 trillion, a decrease of $174.303 billion.
Major banks such as Citibank, Bank of America, Wells Fargo, and JPMorgan Chase experienced at least a 2% quarterly decline. Overall, deposits across the commercial banking industry have plummeted by approximately $947 billion from their all-time high of $18.203 trillion set in April 2022.
Industry Shifts Towards Wholesale Funding
To compensate for the deposit outflows, banks are increasingly relying on wholesale funding through brokered deposits from large financial institutions. This shift is accompanied by a growing dependence on loans and leases to bolster their balance sheets as total assets continue to decrease across the industry.
Hot Take: Industry Transformation Amidst Asset Decline
The decline in non-brokered deposits and shrinking total assets point to a transformation within the US banking industry as it adapts to evolving market conditions and adjusts its funding strategies.
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