US bank deposits drop year on year for first time ever, S&P says
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US bank deposits have declined the most since 1994.
PHOTO: BLOOMBERG
NEW YORK – The American banking industry’s total deposits declined year on year for the first time in data going back to 1994 following a tumultuous period for the sector.
Total deposits at US banks ended the financial year at around US$17.3 trillion (S$23.7 trillion), a 4.8 per cent decrease from the prior period ended June 30, S&P Global Market Intelligence said in a report published on Tuesday.
S&P’s findings are based on an annual survey conducted by the Federal Deposit Insurance Corp.
The latest survey results were published last week.
S&P’s analysis demonstrates the magnitude of bank outflows in 2023 as higher interest rates incentivised depositors to pull cash out of chequing or savings accounts and place them in higher-yielding alternatives.
A series of bank failures touched off by the rate environment motivated further withdrawals.
Charles Schwab Corp reported the largest decrease, primarily due to outflows from brokerage accounts.
Its deposits fell 31.1 per cent to US$304.79 billion, S&P said in the report.
Higher rates likely spurred some Schwab clients to move money from the bank to its other investment products, such as money market funds.
Bank of Montreal’s deposits gained the most, thanks to its acquisition of Bank of the West, a deal completed earlier in 2023 that brought deposits at the firm to US$202.24 billion. BLOOMBERG
