Analysts cutting loan growth estimates at US banks

The analyst community has adopted a more cautious stance on US bank loan growth this year amid a slew of macroeconomic wildcards.

Analysts began lowering net loan growth estimates for 2025 in January, and the downward revisions accelerated in April following earnings reports, according to data from Visible Alpha, a part of S&P Global Market Intelligence.

As of April 29, analysts projected the 20 largest US public banks would record a 2025 median annual growth rate in net loans of 2.5%, marking a decline of 49 basis points since March 31. While estimated growth for the larger universe of US banks trading on a major exchange was higher, at 4.3%, estimates for this group also fell in April, losing 54 basis points.

The analysis included banks with an estimate update reported in April and at least three Visible Alpha estimates available for each period.

The industry reported tepid loan growth in 2024, when total loans and leases rose just 2.2%. Analysts' darkening outlook conflicts with the most recent H.8 report by the Federal Reserve, which estimated that seasonally adjusted loans and leases at domestically chartered banks rose $76.90 billion, or 0.6%, from April 2 to April 16. Much of that growth came from loans to nondepository financial institutions, up $32.40 billion, and commercial and industrial (C&I), up $18.20 billion.

The tariff issue

President Donald Trump launched a new US tariff plan April 2, sending stock values down amid elevated market uncertainty. Escalating import prices and changing tariff policies could dampen general business conditions, including bank loan growth.

A counterpoint to lowered growth expectations could be customers getting ahead of the tariff issue by tapping unused commitments. Higher utilization rates could explain at least part of the reported strong growth in early- to mid-April.

In KeyCorp's April 17 earnings conference call, Chairman, President and CEO Christopher Gorman said C&I utilization rates at the bank were up in the first quarter.

"I had personally thought that we would see that a lot earlier," Gorman said. "I thought people would be forward buying the tariffs. ... I would anticipate, given this 90-day reprieve, that we'll continue to see probably a little bit of an increase in utilization."

PNC Financial Services Group Inc. CFO Robert Reilly also said in an April 15 earnings conference call that a long-awaited increase in C&I utilization at the bank had arrived, with the metric gaining 80 basis points between the end of December 2024 and March 2025. Reilly said it was hard to know if the increase was related to defensive posturing or US tariff announcements.

"In all the dialogue that I've kind of had with clients, nobody is saying they're purposely building inventory in advance of the tariffs," PNC Chairman and CEO Bill Demchak said on the same call. "Having said that, most of our lines finance working capital. So almost definitely, there's some inventory build going on."

In a chaotic market, timing could be critical to secure loan funding.

"We are confident that project loans, which are characterized by long lead times and complex governmental approvals, will continue to fund as we move throughout the year," Gorman said. He drew a distinction, however, between existing projects in the pipeline, which should not be impacted by tariffs, and new projects, which could be put on hold until there is greater visibility.

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The biggest movers

Flagstar Financial Inc. experienced the most volatility in its loan growth estimate among the 20 largest banks, with a decrease of 350 basis points in January, followed by an increase of 309 basis points over the next two months. The bank's consensus estimate fell by 121 basis points in April. As of April 29, its net loan growth was projected to contract by 4.9% in 2025. Projecting Flagstar's overall growth rate could be challenging as the bank is changing its business model, shrinking the commercial real estate loan portfolio while setting the stage for commercial and industrial (C&I) loan growth.

Flagstar has been rapidly increasing C&I loan originations and commitments. In the first quarter, originations in the overall segment were $769 million, up 159% from two quarters earlier, according to a filing. C&I commitments more than tripled over that period to over $1 billion.

"Even though we've been originating these new C&I loans, the C&I balances have been decreasing quarter over quarter as we've right-sized other legacy portfolios," Flagstar CFO Lee Smith said in an April 25 earnings conference call. "So we're sort of making that pivot, and you'll see an increasing C&I loan balance Q2 and going forward." The bank's goal is to increase outstanding C&I loans by $1.5 billion a quarter once fully staffed, he said.

In terms of loan growth for the 20 largest banks, analysts have soured the most on Comerica Inc. The analyst estimate for the bank's 2025 annual net loan change fell 262 basis points in the second quarter to negative 0.1% as of April 29. The estimate change aligns with the bank's projections. In an April 21 filing, Comerica updated its 2025 loan growth guidance to roughly flat, from 3% in the Jan. 22 earnings document.

Analysts also lowered loan growth estimates more than 150 basis points from March 31 to April 29 for M&T Bank Corp. and Regions Financial Corp., reflecting more pessimistic guidance from both banks. M&T downwardly revised its loan growth forecast in its first-quarter earnings presentation, and Regions disclosed in its first-quarter earnings report that it expects full-year 2025 average loan balances to be relatively stable compared to 2024.

"Within the business portfolio, average loans remained stable as customers continue to carry excess liquidity and utilization rates remain below historic levels," Regions Financial CFO David Turner Jr. said in an April 17 earnings conference call. "Although pipelines and commitments continue to trend higher versus this time last year, it is too early to assess the full impact tariffs will ultimately have on loan demand."

Analysts are more optimistic about Bank of America Corp. growing its loan portfolio this year. Net loans were projected to rise 3.9% in 2025 as of April 29, the highest projected growth rate among banks with more than $250 billion in total assets and an 84-basis-point-increase from the bank's March 31 estimate, marking the largest positive change among the top 20 banks.

"We grew commercial loans in nearly every line of business," said Bank of America Chairman, President and CEO Brian Moynihan in an April 15 conference call. "This is the second quarter in a row they've grown across the board."

Moynihan credited the bank's multiyear investment of building out commercial teams around the world and "making that capacity more efficient using some artificial intelligence and machine learning to direct that calling capacity."