"Due to Anxiety..." $2 Trillion More Poured into US Bank Deposits Since COVID-19

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Amid growing anxiety due to the novel coronavirus disease (COVID-19) crisis, deposits at major U.S. banks have increased by $2 trillion (approximately 2,427 trillion won) over the past five months, CNBC reported on the 21st (local time), citing the U.S. Federal Deposit Insurance Corporation (FDIC). Despite large-scale economic stimulus measures, individuals and businesses with heightened concerns appear to have focused more on securing cash rather than spending.

According to FDIC data, the total deposits held by commercial banks in the U.S. amounted to $15.4708 trillion as of the 10th. Deposits, which were $13.304 trillion in January, increased by $2.1668 trillion during the pandemic. The surge was particularly sharp in April and May, when COVID-19 cases rapidly increased in the U.S. Deposits rose by $865 billion in April alone, an unprecedented monthly increase that exceeded the total amount Americans saved throughout the entire previous year. Deposits also grew by $604.6 billion in May.

CNBC, citing the FDIC, noted that more than two-thirds of the deposits were concentrated in 25 large institutions, among which major Wall Street banks such as JP Morgan Chase, Bank of America (BoA), and Citigroup grew faster than other sectors in the first quarter. Brian Foran, an analyst at Autonomous Research, described the growth as "completely astonishing," saying, "The banks overflowing with cash resemble Scrooge McDuck swimming in money."

CNBC evaluated that major U.S. banks are benefiting from this deposit 'bonanza.' It cited three reasons for the significant increase in bank deposits. First, after the lockdown measures to prevent COVID-19 spread in March, major U.S. companies like Boeing and Ford increased their credit lines by hundreds of billions of dollars to raise funds, which were temporarily held in banks. Additionally, banks served as channels for Payroll Protection Program (PPP) funds, which Americans deposited into their accounts.

Furthermore, the COVID-19 crisis heightened uncertainty, leading to a substantial increase in household savings. According to the U.S. Bureau of Economic Analysis (BEA) under the Treasury Department, the personal savings rate in April reached a record high of 33%. Disaster relief payments of $1,200 per adult were distributed, and unemployment benefits were significantly expanded, resulting in a 10.5% increase in personal income that month.

These factors appear to have contributed to the substantial expansion of bank deposits. By bank, JP Morgan saw the largest increase in deposits in the first quarter of this year, rising 18% compared to the fourth quarter of last year, while Citigroup and Bank of America (BoA) also increased by 11% and 10%, respectively.

This content was produced with the assistance of AI translation services.