The SD is one of the more significant banking
surveys, and uniquely gives a comprehensive snapshot of the world’s
largest banking industry.

Some of the headline-grabbing points for the
2009 SD report include:

• Total deposits across the country’s
commercial banks grew by 12 percent to $6.6 trillion;

• The 10 biggest banks by domestic deposits
now account for more than 50 percent of total sector deposits;

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• Total branch numbers continued to grow,
reaching almost 100,000;

• Employment at the country’s largest 20
retail banks increased by 1 percent overall despite the perception
that banks have been cutting staff;

• Bank of America has strengthened its
position as the biggest US bank by deposits;

• Citigroup has maintained the top slots for
average retail deposits and average retail lending per branch;

• With $834 billion in deposits, California
shades New York ($826 billion) as the biggest single market in the
US by deposits. Texas, Florida and Illinois made up the top
five;

• With a 32.8 percent market share, Chase
dominates the New York market;

• HSBC ranks second in New York for the third
year in a row with 7.8 percent – down 2 percentage points from
2007;

• In Texas, Bank of America (17.7 percent)
overtook Chase (16.2 percent) to take top slot for deposits;

• Total commercial bank numbers fell to 6,695
from 7,203 in June 2008;

• Banks with total assets in excess of $10
billion grew to 88; and

• Total sector assets remained flat at $13.29
trillion.

Bank of America (BofA), thanks largely to the
controversial acquisition of Merrill Lynch last September for $20
billion, strengthened its position as the US’ biggest bank by
deposits. Total domestic deposits increased by almost 30 percent at
BofA to $907.3 billion, giving it a 13.7 percent market share of
total commercial bank deposits of $6.61 trillion at the end of the
first half of 2009. Boosted by its acquisition of Washington
Mutual, retail deposits soared by 44.7 percent at JPMorgan Chase to
$534.6 billion while Citi posted a 29 percent rise in retail
deposits to $226 billion.

But with a branch network of only 1,046
domestic outlets (down 27 on the year), Citi comfortably retained
top slot for average retail deposits per branch ($216.1 million)
while HSBC’s US unit remained in second position by this measure on
$155.2 million. Of the others, only BofA ($109.2 million) and Chase
($102.2 million) exceeded average retail deposits of $100 million
per branch.

As a result of the merger and acquisition
activity of the past two years, the 10 biggest banks by domestic
deposits now account for more than 50 percent of total sector
deposits.

Savings safe havens

This year’s results have, however,
been boosted by retail savers seeking the safe haven of
FDIC-insured institutions as well as investors pulling money out of
the stock market, as it declined in the second half of 2008, and
into cash instruments.

In addition, banks’ retail deposits have
benefited from individuals cutting personal spending during the
recession due to fear of rising levels of unemployment. Indeed,
despite the banking turmoil of the past year, the findings were far
from universally negative.

Positive conclusions included total employment
at the country’s largest 20 retail banks increasing in the year to
30 June, up 1 percent to more than 1,050,000.

However, the figures were skewed by increases
at Chase and BofA as a result of their various M&A
activity.

Employment fell at 14 of the 20 largest banks,
notably at internationally-owned Citizens (down by 6 percent) and
18 percent at HSBC, while Spanish rivals BBVA and Santander slashed
employee numbers at their US subsidiaries by 14.5 percent and 19.4
percent respectively.

The recent growth in US commercial bank and
savings institutions’ branch numbers was maintained, the total
almost hitting 100,000 by 30 June. Although the number of savings
institution outlets contracted for the third year in a row, with
more than 2,300 units closing, the loss was more than offset by the
opening of an extra 2,770 commercial bank branches.

In addition to the substantial increase in
branch numbers at Chase and Wells Fargo following their
acquisitions of Washington Mutual and Wachovia respectively,
significant network changes were also seen at US Bank where branch
numbers increased by more than 300 to 2,902.

By contrast branch cuts continued at Regions
Bank where more than 1 in 10 branches have closed in the past two
years, the network being cut from almost 2,100 to 1,882 units.

Weak lending from Citi

The FDIC’s SD report in relation to
domestic retail lending highlighted Citigroup’s weakened appetite
for this segment of the market. No other bank in the country’s 20
largest retail lenders came close to Citi’s more than 17 percent
drop in lending in the year to 30 June.

Further cuts in Citi domestic lending in the
year ahead are assured as the bank accelerates asset disposals from
its non-core Citi Holdings unit, in which US consumer lending is
the largest component part.

In his presentation to analysts which
accompanied release of the bank’s third-quarter results on 15
October, Citi CEO Vikram Pandit said: “In the third quarter,
[CitiHoldings] assets were reduced by $32 billion and are now down
$281 billion from peak levels in the first quarter of 2008… our
goal is to wind down Holdings as quickly and as prudently as
possible.”

While Citi slashed retail mortgage lending
(down by 10.4 percent in the year to 30 June), its lack of
enthusiasm for home lending was exceeded by HSBC (down by more than
30 percent), Capital One (down 13 percent) and Citizens (12.7
percent). By contrast, Canada’s TD’s stepped up its retail lending,
with total retail loans up by more than 15 percent, while its
retail lending per branch increased by more than 20 percent.

Of the other top 20 retail lenders, only
M&T and BofA reported double-digit retail lending per branch
growth, up by 12.4 percent and 13.5 percent respectively.

With a national market share of around 20
percent, BofA retains top slot for retail mortgage lending; it
increased home loans by almost one-quarter in the year to 30
June.

Looking ahead

Looking ahead to the next 12 months,
a number of cyclical economic factors will affect the next annual
FDIC summary of deposits: with unemployment figures expected to
level off, enabling individuals to increase personal spending,
sector deposit growth is expected to slow.

Any continued recovery in the stock market
will also, say analysts, give way to an increased proportion of
retail savings being diverted back to stocks.

Finally, the ongoing collapse in rates of
interest being offered by certificates of deposit is likely to lead
to more and more customers cashing in CDs as they fall due, with
savings leaving retail banks as investors seek higher returns
elsewhere.

A number of banks look well placed to
capitalise once the economy picks up, in particular JPMorgan Chase,
expected to benefit once its expanded network of over 5,200
branches are fully branded under the Chase moniker.

It reported third quarter profits of $3.6
billion, up from $527 million in the year ago period, beating
analyst forecasts for the second successive quarter (see EU ends ING’s global
ambitions).

While its retail unit was only just in profit
($7 million) and its card arm lost $700 million with the
expectation of further card losses to follow into the New Year,
Chase CEO Jamie Dimon told analysts: “Retail is still opening
branches. Our marketing budget so far for 2010 in card is up by
several hundred million, it’s not down.”