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
Subscribe to our Social Media for Exclusive Crypto News and Insights 24/7!
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.
