A modest reduction in the American Banker Index of Banking Activity (IBA) composite index in August, to 56.9 from 57.5 in July, came amid an intermittent but pronounced summer-long decline in real estate conditions and consumer lending, as reported by U.S. financial institutions responding to the September IBA survey.
The IBA component index that measures consumer loan-application volume fell nearly 8 percent, to 52.2 in August, down from 56.7 in July. As illustrated in the chart below, this extended a decline in consumer loan-application volume that continued, with intermittent plateaus, since March. That month, the consumer-loan application component index was 66.7, its highest reading since index data collection began in June 2012. The August reading for that index is down 22 percent from that peak. The consumer loan-approval index, which is not depicted on the chart, tracks closely with the consumer loan-application index; it declined 7.3 percent, to 52.1 in August, down from 56.2 in July.
A general decline in real estate business has accompanied the slide in consumer lending, according to survey respondents. The IBA component index that tracks in-market real estate conditions fell more than 10 percent in August to 57.5, down from 64.3 in July. The real estate conditions component index has been trending downward since May, when it reached an all-time peak of 70.5.
Other highlights of the index survey:
- Commercial lending saw some improvement from July to August, as the commercial loan-application component index rose 2.6 percent to 59.2, up from 57.7 in July. Overall, however, survey respondents reported an overall decline.
- The component index that tracks institutional staffing levels fell 9 percent from 52.5 to 47.8 in August, effectively erasing a gain reported in July, when the component index increased from 47.0 to 52.5.
Source: American Banker and VantageScore Solutions, LLC
Compiled from surveys of executives at hundreds of financial institutions across the United States, the index is an industry bellwether that tracks 16 distinct business indicators, such as volume of deposits, loan applications, and loan delinquencies, and how they change month over month. Measurements of each of these components are combined into a single Composite Index, in which readings above 50 indicate business expansion, and those below 50 signify contraction. Find more information about the Index and its component measurements at AmericanBanker.com.