[Asia Economy Reporter Park Byung-hee] It has been confirmed that U.S. companies have increased their loan limits but are not actually borrowing.
The Wall Street Journal (WSJ) reported on the 4th that the amount of unused corporate credit lines at U.S. banks is at an all-time high.
As of the end of June, the unused corporate credit limits at JP Morgan and Bank of America (BOA) are approaching $1 trillion. JP Morgan recorded $502.6 billion, and BOA recorded $462 billion. Considering that at the end of Q2 last year, JP Morgan had $413.4 billion and BOA had $391.9 billion, this represents a 20% increase over one year.
At the end of Q1 last year, before the full spread of COVID-19, the unused credit limits at the two banks were about $350 billion. However, as COVID-19 spread, companies increased their credit limits to secure liquidity.
Even after the economy showed signs of recovery this year, credit limits continued to increase. According to bank officials, requests from corporate clients to expand credit limits have surged in recent months. However, despite increasing loan limits, companies are not actually borrowing, causing the amount of unused credit lines to reach record levels.
This means that companies have secured funding to expand investments but are not borrowing money from banks. WSJ analyzed that rising economic uncertainty due to the spread of the Delta variant and ongoing issues such as supply chain and workforce acquisition are still causing companies to hesitate in expanding investments.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
