For the last few years, banks have been building cash reserves and have kept tight reins on lending. That’s starting to change. Now, banks are lending money to individuals and businesses at their most rapid pace since the financial crisis. As ideastream’s Joanna Richards reports, Cleveland-based KeyBank is part of that trend.
KeyBank says it increased its commercial, financial and agricultural loans by about 13 percent in the first half of 2014 over the same period last year. And its overall lending was up 6 percent.
That’s in line with a national trend, according to a Wall Street Journal report. The paper credits the increase in loans with boosting banks’ profits to near-record heights.
"Banks are earning more money right now out of their loan portfolios than they are out of their deposit portfolios," said Lisa Oliver, Northeast Ohio market president for KeyBank
Low interest rates are one reason for the trend, she said. But it also reflects a strengthening economy. Businesses are in better financial shape and more optimistic, so they’re starting to make upgrades and invest in expansion.
"As that market demand coming out of the recession has begun to slowly increase, we’re seeing growth and an increase in requests for loans," Oliver said.
More loans means more spending by individuals and businesses – which reinforces the positive outlook for the recovery.