Consumer loans grow 4.4%
According to the latest Federal Reserve data released on June 12, 2015, consumer loans at all US commercial banks increased by 4.4% YoY (year-over-year) in the week ending June 5, 2015. Consumer loans have been growing at an average weekly YoY rate of 4.5% for the last two months.
The above graph shows the weekly YoY growth in consumer loans at all US commercial banks. Credit card loans account for nearly half of the total consumer loans at commercial banks. Card loans grew by 4.1% YoY in the week.
The outstanding credit card and other revolving loans grew in April and May, reflecting increased consumer spending after the winter months. American Express (AXP), J.P. Morgan (JPM), Citigroup (C), and Capital One Financial (COF) are some of the banks that will directly benefit from greater card loans.
Together, these four banks account for ~16.4% of the Financial Select Sector SPDR Fund (XLF).
The above graph shows the weekly trend in credit card and other revolving loans for all US commercial banks.
Consumer spending remains flat in April
According to the latest data from the Department of Commerce released on June 1, 2015, personal consumption expenditure in current dollars remained unchanged in April compared to March. It rose by 0.5% in March, according to the revised numbers. The growth in consumer spending in March helped card loan growth at banks.
But the stagnation in consumer spending in April indicates that consumers aren’t very confident about the overall economy and are still being cautious.
Over the longer term, higher spending indicates a generally growing economy. This leads to higher loan demand and increased capital market activity, both of which are positive for the banking sector.