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.