Magazine article American Banker

Top Consumer Loan Portfolios Grew 5.6% in '98

Magazine article American Banker

Top Consumer Loan Portfolios Grew 5.6% in '98

Article excerpt

The strong economy has boosted banks' balance sheets, but not all of their consumer business lines are sharing equally in the boom.

Consumer loans on the books of the 50 consumer lending institutions grew 5.6% in 1998, according to data gathered by Sheshunoff Information Services for American Banker.

The most striking growth category was home equity loans, which rose 9.4% among the top 50 in 1998. The larger category of credit card loans declined 9.7%, and first mortgages grew 7.19%.

"The statistics seem to suggest that card lenders have lost market share," said David Levy, director of forecasting at the Jerome Levy Economic Institute in Mount Kisco, N.Y.

Aggressive home equity marketing combined with low interest rates and record levels of homeownership may be contributing to consumers' preference to carry their debt in vehicles other than credit cards, economists say.

The strongest sectors of the economy are housing and automobiles, said Lawrence Chimerine, chief economist at the Economic Strategy Institute in Washington. It is therefore not surprising that the strongest credit growth was linked to real estate and auto lending, Mr. Chimerine said.

All other consumer loans, according to the data, rose 12% in 1998. This catch-all category includes auto, boat, personal, and student loans.

Economists suggested that the two-digit growth was due mostly to auto loans and other loans related to luxuries.

The decline in card debt is more confounding and perhaps partly explained by the fact that the data cover only the loans banks keep on their balance sheets, and not securitizations. …

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