According to reports, after the U.S. banking industry experienced a turbulent period at the beginning of this year, total deposits recently fell year-on-year, which was the first time since data were available in 1994.
S&P Global Market Intelligence said in its latest report on Tuesday that U.S. bank deposits totaled about $17.3 trillion as of June 30, down 4.8% from a year earlier. The results are based on an annual survey conducted by the Federal Deposit Insurance Corp.
Analysis by S&P shows the scale of bank outflows this year as higher interest rates incentivize savers to pull cash out of checking or savings accounts and put it into higher-yielding alternatives. This interest rate environment triggered a series of bank failures and led to further withdrawals from banks out of fear.
Among them, Charles Schwab Corp. reported the largest decline, mainly due to outflows from brokerage accounts. S&P said in a report that Schwab's deposits fell 31.1% to $304.79 billion. Higher interest rates may prompt some Schwab clients to move money out of Schwab and into other investment products, such as money market funds.
Bank of Montreal saw the largest growth in deposits, thanks to its acquisition of Bank of the West. The deal, completed earlier this year, brings Bank of Montreal's deposits to $202.24 billion.
It is not difficult to see that the banking crisis in the United States has not yet been resolved. In recent times, Wall Street bosses have frequently issued warnings about this. JPMorgan Chase & Co. CEO Jamie Dimon warned on Monday that the banking crisis was not over yet and further turmoil was expected.
Dimon said the current situation will inevitably lead banks to raise lending thresholds. Especially in commercial real estate, things are looking increasingly bleak. "You've seen credit tighten because the easiest way for banks to preserve capital is not to make the next loan," he said.
Vishwanath Tirupattur, global head of quantitative research at Morgan Stanley, had earlier warned that he was skeptical of optimism that the "banking turmoil" had passed.
"Moody's downgrade of 10 U.S. regional banks reminds us that unfavorable factors such as potential increases in capital regulatory requirements, rising financing costs, and rising loan losses continue to challenge the business models of U.S. regional banks." he added.