Deposit losses topped $470 billion in the first quarter of 2023, according to the FDIC
Banks in the US saw total deposits decline by a record 2.5% in the first quarter of the year, the Federal Deposit Insurance Corporation (FDIC) reported on Wednesday.
The outflow was the largest recorded by the FDIC since it started collecting such data in 1984.
According to the report, US banks lost $472 billion in deposits during the January-March period, marking the fourth consecutive quarter of industry outflows. The decline was primarily from uninsured funds, the FDIC said, noting that insured deposits actually increased by $255.1 billion, or 2.5%, amid the failures of several regional banks.
“The more lasting effects of the industry’s response to that stress may not become fully apparent until we’ve received the second-quarter results,” FDIC chair Martin Gruenberg stated.
The report did not cover First Republic Bank, which collapsed on May 1, becoming the third US lender to fail this year.
The FDIC also said that the number of banks on its “problem list” had increased by four to 43, while assets held by banks on that list rose to $58 billion.
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Gruenberg warned that the US banking sector continues to face other risks caused by inflation, rising rates, and economic pressure, particularly in areas such as commercial real estate.
The S&P 500 bank index dropped 2.6% on Wednesday following the report, having hit its lowest point in around two weeks. The Dow Jones Industrial Average was down 0.4%, or 130 points, while the tech-heavy Nasdaq slid 0.6%.
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