LONDON (Bloomberg) - The largest U.S. banks are about to reveal how they fared as customer deposits came under siege in the first quarter.
Deposits at JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp. are expected to have tumbled $521 billion from a year earlier, the biggest drop in a decade, according to analysts’ estimates. The decline — which includes a $61 billion slide in just the first quarter — comes as a late influx of cash following a crisis at regional lenders failed to offset the steady drain of customers to products offering higher rates.
The largest U.S. banks have likely seen over half a trillion dollars in deposit outflow from a year earlier as
Banking analysts estimate that JPMorgan, Wells Fargo, and Bank of America have lost $521 billion in deposits over the past year in the sharpest slump in a decade. In the first quarter alone, the drop reached $61 billion as a late influx of cash following a crisis at three U.S. lenders failed to offset the outflow of funds to products offering higher interest rates, the outlet said.
In early March, massive deposit runs caused two lenders, Silicon Valley Bank and Signature Bank, to fail within days. A third lender, First Republic, ended up being the recipient of a $30-billion rescue from top Wall Street banks in the form of deposits. The big lenders stepped in amid investor fears that First Republic could become the next U.S. bank to fail.
Bank deposits have been shrinking since the beginning of last year amid high inflation, which eats away at savings, thus encouraging depositors to seek more yield than is being offered by deposits.
The recent upheaval has also sent banking stocks tumbling. The KBW Bank Index, a benchmark index tracking the leading lenders, lost 25% in March alone. Regional banks were the biggest losers last month, with First Republic Bank seeing its shares fall 89%.