US banks easing lending standards for businesses in second quarter

Loan officers at US banks reported easing standards and terms on business loans in the second quarter as the economy revved up on the back of wider reopenings and rising coronavirus vaccination rates.

The officers also said in the Federal Reserve survey released on Monday that there was greater demand for business loans from firms of all sizes.

“Major net shares of banks ... cited a more favorable or less uncertain economic outlook, more aggressive competition from other banks on nonbank lenders, and improvements in industry-specific problems as important reasons,” the US central bank said in its quarterly survey.

The US economy grew at a 6.5 per cent annualized rate in the second quarter, pulling the level of gross domestic product above its pre-pandemic peak, Commerce Department data last Thursday showed.

For consumers, banks reported easing standards across all three loan categories — credit card loans, auto loans, and other consumer loans - and saw stronger demand for them during the same period.

The Fed surveyed loan officers at 75 domestic banks and 22 US branches and agencies of foreign banks.