Some of the nation’s largest financial institutions are sitting on a pile of untapped cash and credit, with JPMorgan and Bank of America holding nearly $ 1 trillion in credit commitments, the Wall Street Journal (WSJ) reported on Wednesday 4 August.
Bankers are hopeful that unused business credit will trigger a spending rush in the months to come. They also said that companies had increased requests for lines of credit and asked that the credit could be easily used to spend on talent, inventory, etc.
Supply chain issues and labor shortages, both of which stifle companies’ ability to spend the money they have, are a problem. Bankers, however, are seeing signs that corporate spending is about to explode, according to the outlet.
See also: Banks seek to temper corporate deposits
Bank of America CEO Brian Moynihan recently told analysts the economy will get a boost as people keep spending money and employers keep hiring, “and hopefully will lead to use increased our loans, âhe said, according to the WSJ.
There is no interest income for banks when they hold unused loans and lenders have tried to increase the number of loans given. Thus, financial institutions have made it easier for businesses to access the maximum amount of credit.
A Federal Reserve survey in July showed banks are increasingly receiving requests from corporate borrowers for new lines of credit and increased lines of credit, according to the WSJ.
Healthcare companies, food products, wholesale trade and industry are areas where bank chiefs have seen an increase in demand for new credit.
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JPMorgan said a June survey of commercial bank customers showed business confidence to be at an all-time high. Some 46 percent of those polled said they expected to increase their capital spending and 38 percent said they would need to increase their availability of credit.