US Companies Tapping into Credit Lines Signals Positive Economic Recovery

U.S. banks are reporting that companies are tapping more of their credit lines to fund hiring and expand their businesses, a promising sign for the economy.

Commercial borrowers are using two or three percentage points more of their credit lines than they were a year ago, reaching levels not seen since before the financial crisis was at its height in 2009, senior officials at a number of major banks said in interviews and on conference calls this week. 

Companies are using the funds for a variety of things, from boosting manufacturing capacity to investing in new businesses and building inventory as customer demand increases.

“Confidence is back,” said Laura Oberst, an executive vice president at Wells Fargo & Co who oversees commercial banking for the central U.S. region. “It’s fragile still, but stronger than I’ve seen it since the meltdown of 2008.”  

A Wells Fargo spokeswoman could not immediately provide a bank-wide utilization rate for commercial and industrial borrowers, but said it has gone up a few percentage points over the past year.

Bank of America Corp Chief Financial Officer Bruce Thompson said commercial and industrial borrowers were using “in the high 30s” percent of their credit lines last quarter, the highest in six years and up from a range “in the very low 30s” during the recession. The bank declined to comment on where levels stood a year ago.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza