Banks Itch to Lend,
But Firms Sit Tight
Having emerged relatively unscathed from the economy's recent funk, banks once again are itching to lend.
If only American businesses wanted the money.
Though it has been months since evidence started to build that the economy is turning, commercial and industrial lending -- the bread-and-butter business of many of the nation's large banks -- has been stuck in neutral.
The lack of borrowing interest from big corporations jeopardizes what is usually a large source of additional bank revenue during an economic recovery, and could threaten bank earnings at a time when the prospect of rising interest rates already is starting to put pressure on bank stocks.
"It's very important for regional banks," says William S. Demchak, vice chairman and chief financial officer of PNC Financial Services Group, a Pittsburgh-based regional bank that has seen a decline in commercial and industrial lending this year. "The real risk is that in order to make up for it, what banks have been doing is increasing their exposure to interest rates."
For the week ended Dec. 3, the most recent figures available from the Federal Reserve, commercial banks reported $890 billion of commercial loans outstanding, down from $927 billion six months ago and $968 billion a year ago. That follows a 6% drop in 2002, and 28 straight months of year-to-year declines.
Corporate borrowers commonly turn to the loan market when they need capital to invest in plants, hire people or to fund losses. But many companies still aren't operating at capacity, so there is little demand for loans to build plants. Moreover, the economic recovery hasn't been accompanied by a surge in hiring. Thus far, many businesses have been able to increase production without increasing capacity.
To make matters worse, with interest rates still low, large companies have been replacing their bank debt with capital raised in the bond market and commercial paper market, so they don't need the additional loans. Some bankers even contend that the capital markets have grown to the point that many of the nation's biggest companies will never again rely on the bank-loan market as much as they used to.
Terry McEvoy, a bank analyst for Oppenheimer & Co., says he doesn't expect loan growth to resume at least until the second quarter of 2004, and predicts that regional-bank stocks could remain "flat" until the fourth quarter of next year.
After rising by 40% between mid-March and mid-October, bank stocks stalled this fall, and have remained flat since then, according to the PHLX/KBW Bank Index, which tracks 24 bank stocks. The mortgage-refinancing boom stalled out, alarming some investors, and some banks took one-time gains related to improvements in the quality of their existing corporate loans.
Mr. Demchak of PNC predicts there will be a divergence in the share-price performances of banks, depending on how much of their revenues come from interest income connected to lending and on their ability to hedge interest-rate risk. While PNC declined to say how much its commercial loan business has dropped, Mr. Demchak says PNC is far less reliant on interest income from such commercial loans than other banks. Net interest income -- which includes income from corporate loans, consumer and real-estate loans and other sources -- typically accounts for about 35% of PNC's revenue, compared with more than 50% for many of its regional banking competitors, he said.
Large banks such as Citigroup Inc. and J.P. Morgan Chase & Co. aren't viewed as particularly vulnerable. They've been cutting back on lending to large corporations, and are relying on other lines of business such as investment banking, Treasury-bond management and foreign-exchange trading to cover the shortfall. David Hoyt, head of wholesale lending at Wells Fargo & Co., says he hasn't yet seen a resurgence in corporate borrowing for core uses such as working capital and building inventory, but noted that other products are doing well. "For us, loans are just one of the products we sell," he said.
But most of the nation's regional banks regard commercial lending as a core business, and are likely to feel the pressure. Large Midwestern lenders such as Comerica Inc. and KeyCorp are among the most vulnerable, analysts say, due to the region's heavy manufacturing base.
To make matters worse, interest rates are viewed as ripe for an increase. Early on, this could help banks, which will see investment returns pick up more quickly than the rates of interest they pay to depositors. But rising interest rates also will further erode revenue from mortgage lending, which already has fallen sharply as refinancing activity dried up.
Commercial lending has always been a cyclical business. Over the past six decades, the banking industry has endured five periods of significant year-to-year commercial-loan declines, with the previous decline that began in 1991 lasting 35 months, according to Oppenheimer.
Steven Wharton, an analyst with investment manager Loomis Sayles & Co., characterizes the numbers as "kind of ugly." Without such loan growth, he says, "it doesn't provide a lot of opportunity for revenue growth. As you look at '04, you can't count on a lot of earnings growth coming from loan growth. It doesn't look like you're going to get a big boost in earnings from the recovering economy."
An October survey of senior loan officers at 52 domestic and foreign banks showed that the deterioration in demand for commercial loans had slowed and showed signs of stabilizing. Still, only 12% of banks reported that demand for commercial and industrial loans from large and midsize borrowers had strengthened in the prior three months.
But New York-based Loan Pricing Corp., which tracks the loan market, has detected a pickup in large corporate loans that are syndicated to three or more lenders -- which is expected to help boost the overall lending levels.
"We will see it pick up in '04," said Michael Holton, who invests in financial stocks as a portfolio manager at T. Rowe Price Group Inc. "The question becomes when, and how much."
银行重新展露放贷意愿
在相对平稳地渡过了最近的经济衰退后，各家银行在放贷方面又再度蠢蠢欲动。
但只有为数不多的美国企业有贷款需求。
尽管几个月来已有越来越多的证据显示美国经济正在好转，但被许多美国大型银行视作生命线的工商业贷款需求却一直不温不火。
由于大公司缺乏贷款兴趣，银行业无法像以往那样使自己的收入随著经济复苏而水涨船高，而且随著银行类股已开始因加息前景而蒙受压力，这种局面还有可能威胁到各家银行的收益。
匹兹堡的地区性银行PNC Financial Services Group的副董事长兼首席财务长威廉?S?德姆查克(William S. Demchak)说，增加贷款发放对地区性银行来说显得十分重要。他说，真正的风险在于，为了克服贷款需求不足的困难，各银行一直在加大自己承受的利率风险。
美国联邦储备委员会(Federal Reserve, 简称Fed)的最新数据显示，12月3日当周，各商业银行公布的商业贷款余额为8,900亿美元，低于6个月前的9,270亿美元，以及1年前的9,680亿美元。2002年的贷款余额已经下降了6%，迄今为止，商业银行的商业贷款余额已连续28个月低于上年同期。
当企业需要资金用于工厂建设、招募新人以及弥补亏损时，它们会在市场上寻求贷款。但由于许多公司的开工率依然不足，所以它们没有什么建造工厂的贷款需求。此外，就业人数也并未随著经济复苏而显著增加。因此，迄今为止许多企业仍然能在不扩大产能的情况下增加生产。
更糟糕的是，由于利率依然处在低水平，大型企业一直在用从债券和商业票据市场募集的资金来替代其银行债务，所以它们不需要增加贷款。一些银行家甚至声称，资本市场已发展到了许多美国大型公司可以无需再像以往那样多地依赖银行贷款的地步。
Oppenheimer & Co.的银行业分析师特里?麦伊维(Terry McEvoy)说，他预计至少在2004年第二季度之前贷款需求不会恢复增长，他还预测说，地区银行类股在明年第四季度前仍将表现平平。
在3月中旬至10月中旬增长了40%以后，银行类股的升势今年秋季停顿了下来。据跟踪24只银行类股的PHLX/KBW银行类股指数显示，银行类股自那以来一直表现平平。按揭再融资热潮的消退给一些投资者敲响了警钟，而一些银行开始计提与现有公司贷款质量提高有关的一次性所得。
PNC的德姆查克预计各银行股票的表现将参差不齐，这将取决于各银行贷款利息收入在总收入中的比例，以及它们规避利率风险的能力。虽然PNC拒绝透露其商业贷款业务下滑的程度，但德姆查克表示，PNC对商业贷款利息收入的依赖程度远低于其他银行。他称，包括企业贷款，消费者贷款、房地产贷款，以及其他来源的净利息收入通常占PNC收入的35%左右，而许多其他地区银行的这一比例超过了50%。
花旗集团(Citigroup Inc., C)和摩根大通公司(J.P. Morgan Chase & Co., JPM)等大型银行受利息收入的影响不是很大。他们已经削减了对大公司发放的贷款，并正在依靠投资银行，国债管理和外汇交易等其他业务来弥补利息收入的减少。富国银行(Wells Fargo & Co., WFC)大规模贷款部门的主管大卫?霍伊特(David Hoyt)表示，用于流动资金和增加库存等核心用途的公司贷款仍未恢复增长，但该银行的其他业务表现不错。他称，贷款只是该银行的众多业务之一。
但美国大多数的地区银行则将商业贷款视为一项核心业务，因此有可能感到压力。分析师表示，Comerica Inc.和KeyCorp等中西部地区的大型银行最易受到利息收入影响，这主要是由于该地区制造业的规模较大。
更糟糕的是，利率似乎很快将被上调。从初期来看，这将对银行有所帮助，因为投资回报的增长快于储蓄利率的提高。但利率的提高也将进一步削减抵押贷款的收入。而抵押贷款收入由于再融资活动的匮乏早已经出现了大幅的下降。
商业贷款一直是一项周期性起伏的业务。据Oppenheimer称，在过去的60年中，银行业经历了5次商业贷款较上年同期出现下降的时期，最近一次是在1991年，持续时间为35个月。
投资管理公司Loomis Sayles & Co.的分析师史缔文?沃顿(Steven Wharton)认为上述数字令人感到不快。他表示，如果没有贷款的增长，收入出现增长的可能性也大大降低。而展望2004年，银行很难依靠贷款的增长来带动收益的增加。经济的增长似乎无法推动银行收益的增加。
10月份，52家国内和国外银行的高级贷款管理人员接受了一项调查。调查结果显示，商业贷款需求下降的速度趋缓，并有稳定的迹象。但在过去3个月中，仅有12%的银行公布其大中型客户的商业和工业贷款需求出现增长。
但跟踪贷款市场的纽约Loan Pricing Corp.发现，银团贷款出现增长，预计这将有助于推动整体贷款水平的提高。
T. Rowe Price Group Inc.的投资组合经理迈克尔?霍尔顿(Michael Holton)表示，商业贷款将在2004年出现增长，问题只是什么时候开始增长，增长的幅度有多大。霍尔顿负责为T. Rowe投资银行类股。
