US bank credit contracts, loans drop in latest week: Fed data

(Reuters) -Bank credit at U.S. commercial banks shrank in the latest week as commercial banks pulled back on lending to businesses, data published by the Federal Reserve showed on Friday.

Overall bank credit fell to $17.23 trillion in the week ending Aug. 9, down from $17.25 trillion a week earlier and $17.32 trillion a year earlier, its second straight year-over-year drop.

Loans and leases fell to $12.13 trillion, from $12.15 trillion the week prior; commercial and industrial loans slipped to $2.74 trillion, from $2.75 trillion in the week ending Aug. 2. From a year earlier, commercial and industrial (C&I) loan growth slowed sharply to less than 1%.

The trends reflect reduced demand from borrowers amid the Fed’s rapid interest-rate hikes, as well as tightening credit standards and the fallout from the U.S. regional bank failures this year.

(Reporting by Ann Saphir; editing by Jonathan Oatis and Josie Kao)