Funding Pressures Rise as Securities-Backed Lending Expands

U.S. banks increased their use of wholesale funding in the second quarter as deposit competition remained fierce, according to S&P Global Market Intelligence. FHLB advances rose 14.8% from the prior quarter to $532.4 billion, while CD growth slowed to 0.7% from 1.5% in the first quarter. Banks also began raising CD rates, with 751 institutions offering rates above 3.5% on one-year CDs as of Aug. 28, up from 588 near the end of the first quarter.

Another S&P story discussed securities-backed loans, which rose 5.8% in the second quarter to $573.49 billion, about 13% of total loan growth, as rising markets give customers more assets to borrow against rather than sell.