NEW YORK, NY -- (Marketwire) -- 02/20/13 -- The American Banker Index of Banking Activity (IBA) logged a reading of 56 for the month of December, finishing 2012 with five consecutive strong readings.
The results for December, the latest month for which information is available, were the highest since the IBA was launched in June and marked a slight uptick from the level of 55.8 registered in November. (To view the entire article, visit: http://www.americanbanker.com/issues/178_25/business-optimism-lifts-december-s-index-of-banking-activity-1056479-1.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 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 246 responses to surveys.
BANKING INDUSTRY CONDITIONS
One of the highlights of the December survey was the reading for in-market business conditions, which reached 56.6, rebounding from a decline a month earlier.
In-market real estate conditions also ticked up slightly, hitting 59.7. Several bankers cited a slowly improving housing market as well as an increase in applications to finance rebuilding and renovations in the wake of Superstorm Sandy.
The component tracking hiring retreated a bit December, registering a reading of 49.1, vs. a relatively strong level of 52.1 in November. "Head count remains a priority to keep at a minimum," said one banker.
Consumer loan applications picked up momentum in December, turning in the best showing since August with a reading of 54.5. The pace of approvals for those loans also showed improvement, with a 54.8 reading in December.
The IBA also showed a pickup in applications for commercial loans, although approvals declined from 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 noted that both businesses and consumers like to end the year on a high note, pointing to strong deposit growth due to "normal customer window dressing for year-end reporting purposes," in the words of one lender.
Across the country, bankers pointed to gradual improvement in the real estate market. Some noted accelerated housing transactions before year-end were made in an effort to avoid anticipated higher taxes because of the so-called fiscal cliff, which was averted due to a compromise between the White House and Congress.
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