U.S. Banks Experience Weaker Loan Demand in Q3

(Reuters) – U.S. banks reported reduced demand for a key category of business loans in the third quarter, as well as a decline in consumer credit card and auto loan requests. This was revealed in a Federal Reserve survey released on Tuesday, indicating that the Fed's shift towards lower interest rates has not yet improved overall credit demand.

According to the Fed's quarterly Senior Loan Officer Opinion Survey (SLOOS), the net share of banks experiencing stronger demand for commercial and industrial loans from large and medium businesses fell to -21.3% in Q3, down from 0 in Q2. Similarly, demand from small firms dropped to -18.6% from 0.

On the consumer side, the net share of banks reporting increased demand for credit card loans decreased to -2.1%, down from 2.0% in the previous quarter. For auto loans, it declined to -12.8% from -10.4%.