In some ways, 2017 was the year of the consumer. The year began with high hopes for business borrowing, as the new presidential administration promised to pump up the economy with tax reform and a health care overhaul. As the year wore on, bankers had to adjust their expectations, and those of shareholders, as commercial clients waited to see how taxes and health care would shake out before they took on more debt.
Consumers, though, are spending more than ever.
With the economy continuing to improve and household wealth growing, total consumer debt has increased in 12 consecutive quarters and hit a record $12.8 trillion in the second quarter, according to the Federal Reserve Bank of New York. And, for the most part, consumers are staying on top of their bills. The American Bankers Association said recently that the midyear consumer delinquency rate
held steady around 1.56%, which is below the 15-year average of 2.16%.
Banks searching for growth pushed and pulled on a variety of consumer lending
levers this year. Personal loans, particularly those offered through digital channels, were especially popular
as banks aimed to emulate online lenders’ speed and efficiency. Meanwhile, smaller banks that often lack the resources to beat fintechs are, in some cases, joining them.
There is some cause for concern in consumer lending. Credit card delinquencies, while coming off of historic lows, have been trending upward. Late payments and defaults on auto loans rising as well, and some banks have responded by scaling back their exposure to the auto sector or, in the case of TCF Financial, exiting the business entirely in search of better returns elsewhere.
Here’s a look at some of the recent moves banks have made into and out of consumer lending: