NEW YORK, Dec. 2, 2019 /PRNewswire/ —
US Retail Banking: Opportunities and Risks to 2023
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The total loan balances outstanding (including credit card, personal loan, and residential mortgage balances outstanding) in the US grew at a compound annual growth rate (CAGR) of 2.5% during 2014-18 to reach $12.9tn. The high level of household debt in the country is a direct outcome of a rise in domestic consumption, which has proved to be the driving force of the country’s economic growth. Credit card balances outstanding was the fastest-growing credit segment. The rising disposable income in the US is contributing positively towards borrowers’ enhanced confidence in repaying their loans. Consequently, we estimate the total loan balances outstanding to grow at a comparatively higher CAGR of 3.4% over 2019-23. Leading banks such as JP Morgan Chase, Wells Fargo, Bank of America, and Capital One experienced slight downturns in their respective loan businesses, following the proliferation of non-bank and digital-only lenders that provide quick and competitively priced credit to subprime and near-prime borrowers.
The American deposits market recorded a high CAGR of 5.2% over 2014-18. Despite the low deposit interest rate, retail deposits grew on account of the decreasing unemployment rate and a year-on-year increase in gross household income in 2018. Going forward, with 67% of Americans preferring to…