JPMorgan lending ratio falls as bank is flooded with deposits

JPMorgan lending ratio falls as bank is flooded with deposits

A key measure of JPMorgan Chase & Co.’s lending declined during every quarter in 2020 as the nation’s largest bank showed less and less appetite for extending credit in a battered economy.

The fourth-quarter loans-to-deposits ratio dipped to 47 per cent from 64 per cent a year ago, JPMorgan said Friday. Loans increased by 2 per cent to just over $1 trillion.

If JPMorgan extended credit at the same rate as the entire US banking industry — 64 per cent as of Dec. 30 — it would have about another $368 billion of loans on its books. The bank has experienced lower demand for loans, Chief Financial Officer Jennifer Piepszak told analysts Friday.

The gap comes as customers have flooded JPMorgan with deposits, taking it past the $2 trillion mark with a 37 per cent rise from a year earlier. JPMorgan isn’t the only lender reporting a dip in loans relative to its ability to provide them, but its drop has been steeper, and its ratio is well below that of big-bank peers that have reported fourth-quarter results.

Wells Fargo & Co. lends out the equivalent of 63 cents for every $1 of deposits, down 10 percentage points from a year earlier. At Citigroup, where most deposits are outside the US, the ratio is 53 per cent, down 12 percentage points from year-end 2019.

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