Banks Do More Business Loans as Trading Profits Plummet

Banks Do More Business Loans as Trading Profits Plummet

Screenshot from CNBC news story. Click to read entire article and watch video.

MSNBC reported today that after another year of low returns from in-house investment trading, banks will be returning to what many business owners think should be their bread and butter: writing business loans.

This can only be good news for small- and medium-sized businesses seeking capital to grow, if not get back on their feet. MSNBC says many small business owners are going to the banks to get equipment financing to increase output.

With trading profits falling sharply, the banks have more reason to help the economy grow, which helps drive the “pickup in lending.” The MSNBC story reported:

“As the economy gained momentum in the last three months of the year, large banks booked 5.2 percent more business loans in the fourth quarter, according to Federal Reserve data. That’s up from gains of 3.1 percent and 3.4 percent in the two previous quarters. JPMorgan said its commercial loan portfolio grew by 13 percent in 2011.”

” … For the first time in three quarters, JPMorgan booked more income and revenue from its credit card and card loan businesses than from any other line of business. Consumer credit made up 28 percent of total profit, while investment banking income fell by 52 percent and now makes up less than 20 cents of every dollar of the banks’ total profits.”

Your Turn

What do you think of this news? Are you optimistic that banks will loosen terms to spur business lending?

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  1. That would be good news, but I’ll believe it when I see it. For the last four years, big banks have been paying lip service about how “they’re here to help” us business owners, and every year they do nothing but come up with ever-more ridiculous qualifiers for business loans. They have swung so far to the “overly-cautious” camp, it’s no wonder their profits are in the tank. Banks are PAID to take risks (that’s called interest), and they have gotten away from that. Now, all they do is charge us business owners the same amount of interest, but only if there is NO risk involved.

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