HispanicBusiness

Index of Banking Activity

NEW YORK, NY -- (Marketwire) -- 01/17/13 -- The American Banker Index of Banking Activity (IBA) logged a reading of 55.8 for the month of November, as business activity expanded and hiring accelerated.

The results for November, the latest month for which information is available, were the highest since the IBA was launched in June, when the overall reading was 54.4 percent. (Read more at http://www.americanbanker.com/issues/178_5/index-of-banking-activity-rises-on-hiring-improved-consumer-lending-1055629-1.html)

The IBA tracks the level of business activity across a range of factors that are fundamentally important to the commercial banking business. Composite readings above 50 indicate an expansion of activity and readings below 50 point to contraction. The farther from 50 a reading is, the stronger the indicated change. The IBA composite number has been above 50 in each of the four months that it has been tabulated.

The IBA is a product of American Banker's regular surveys of banking executives and is published in partnership with VantageScore Solutions. The latest installment of the index was based on 253 responses to surveys.

BANKING INDUSTRY CONDITIONS

One of the highlights of the November survey was the reading for staffing, which reached 52.1, the highest tally since the inception of the index and rising from 46.6 in October. This reading indicates that more banks are expanding, rather than reducing, staffing.

Another bright spot was an accelerated pace of consumer loan applications, which logged a reading of 52.1, vs. 50.3 a month earlier. Approval for those applications reached 52, up from 51 in October.

Commercial lending, which was a standout in the October survey, cooled off a bit in November as applications for commercial loans registered a 55.3, down from 60.1 in October. The reading for loan approvals declined to 57.5 from 59.4 the previous month. Both readings, however, remain in expansionary territory.

Optimism for business conditions also retreated in November in the period following Superstorm Sandy, which hit the Northeast in late October. Banks' in-market business conditions logged a reading of 53.9, vs. 57.8 a month earlier.

WHAT RESPONDENTS ARE SAYING

In addition to the quantitative elements of the survey that support the IBA, open-ended questions are posed to respondents seeking information on the factors they believe are having the biggest immediate impact on their businesses.

Several bankers in New York and New Jersey noted their business had been affected by Sandy, which led to power outages and gas shortages. Many pointed to the uncertainty created by the so-called fiscal cliff, when tax hikes and government spending cutbacks were due to begin phasing in on January 1. Lawmakers reached an 11th-hour compromise to avert the cliff in early January.