Auto Drives Consumer Loan Growth at Small Banks

The auto loan space has experienced loosening of underwriting standards in the past year, and smaller U.S. banks appear to have been more aggressive than their larger counterparts, according to some new data from Fitch Ratings.

Specifically, loan books were broadly stable at the 25 largest institutions in 2013, while portfolios grew 4.8% at small banks, according to the report, which analyzed some fresh Fed data. As such, smaller banks are more vulnerable to asset quality deterioration in a rising rate environment, Fitch said.

 Consumer loans also expanded last year, even with the continued deleveraging of U.S. consumers. The aggregate Fed data shows a net year-over-year decline in credit card outstandings on both groups’ balance sheets. But growth of 5% for the group of large banks and and 11% for group of smaller banks in the “other consumer loans” category more than outpaced the shrinkage of card balances.

What’s in that “other” category? Mostly auto and student loans.