The month of November could prove to be a turning point for banking as monthly activity indicators broadly improved, led by a sharp increase in loan pricing.
American Banker's Index of Banking Activity (IBA) rose to 55.9 in November. The index, which had edged lower in October, now stands roughly level with its September reading of 56.1.
Despite that relative stability at the headline level, much has changed with respect to the components that make up the IBA. Most notably, the components that track pricing on new consumer and commercial loans both jumped in November, reaching 59.6 (up 7.8 points) on the consumer side and 59.9 (up 8.7 points) on the commercial side. Both of those components were in contraction territory (below 50) within the last few months.
In addition, recent comments from Federal Reserve officials suggest that economic conditions may support a somewhat more aggressive posture on interest rates than had been expected earlier this year. If so, this month's IBA could mark the start of a more favorable run for loan pricing, an event the industry has long awaited.