The Index of Banking Activity Composite Index recovered some of the ground it lost a month ago, as expansion in consumer and commercial loan approvals offset continuing downward pressure on loan pricing. The Composite Index rose to 59.2 in May, up 3 percent from the April reading of 57.5.
Downward pressure on loan pricing amid lender competition for borrowers, which fueled the Composite Index decline in April, has eased somewhat, although it remains a drag on business expansion. Acceleration in loan approvals, particularly consumer loan approvals, compensated for some of that pressure in May. The consumer-loan approval component index rose to 61.9, up 4.7 percent from 59.1 a month earlier. Commercial loan approvals also increased slightly to 62.7, a 1 percent rise from the April reading of 62.
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.