US banks' commercial and industrial loan growth slowed in Q1

Commercial and industrial (C&I) loan growth slowed at US banks in the first quarter, but lenders still saw good credit quality in the segment as delinquencies continued to fall.

Little stress

US banks' total C&I loans edged lower sequentially by 0.1% in the first quarter, ending five months of consecutive quarterly increases, according to S&P Global Market Intelligence data.

The aggregate industry C&I balance was at $2.529 trillion as of March 31, compared to $2.533 trillion three months earlier. Year-over-year C&I loan growth slowed to 5.6% from 9.5% in the previous quarter.

JPMorgan Chase & Co., which had the second-largest C&I loan book among US banks, ended the first quarter with a 0.5% lower balance in the segment compared to a quarter earlier. C&I loans at the bank grew 6.1% year over year, however.

"We don't grow loans just to grow loans. We deploy capital strategically to support our clients," JPMorgan's CEO of commercial banking, Douglas Petno, said during an investor day May 22. "So in C&I, notwithstanding the broader market uncertainty, we feel very good about our current exposure."

"There's not a lot of stress in C&I," Petno said.

Bank of America Corp. CFO Alastair Borthwick said during a first-quarter earnings call that C&I profitability remains strong.

"Cash flows remain in a good place. I think corporate America learned something from 2009 and 2008, and so leverage is in a good place," Borthwick said. "You add all that up, get a decent environment overall for the economy, and that's where we are with respect to credit quality."

Delinquencies decline

US banks' overall C&I loan delinquency ratio was 0.98% in the first quarter, down 9 basis points from the same period a year earlier.

Of the top 25 C&I lenders, HSBC North America Holdings Inc. posted the biggest year-over-year drop of 85 basis points in delinquency ratio, trailed closely by Goldman Sachs Group Inc., with a decline of 84 basis points.

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Citigroup Inc. posted the third-largest decline in C&I loan delinquency ratio of 76 basis points.

Biggest C&I lenders

Bank of America was the top C&I lender in the first quarter. Its C&I loan balance of $329.49 billion was nearly unchanged from the previous quarter and 5.3% higher than a year earlier.

First Citizens BancShares Inc., which acquired failed lender Silicon Valley Bank in March, posted the biggest jump in C&I exposure among the top 25 C&I lenders in the first quarter. The Raleigh, NC-based bank's total C&I loans as of March 31 nearly doubled sequentially and more than doubled year over year.