Kroll Bond Rating Agency Releases Research Report: Why Is Commercial & Industrial Lending Slowing?

NEW YORK--()--Kroll Bond Rating Agency (KBRA) has received several inquiries about the state of the banking industry and particularly lending volumes, as investors prepare for Q3 2016 earnings from U.S. banks. In the new report, “Why Is Commercial & Industrial Lending Slowing?,” we address some of these concerns:

  • KBRA notes that commercial and industrial (C&I) lending contracted in August of 2016, this after showing strong growth over the past several years. Indeed, growth in C&I lending slowed significantly in July 2016 and then fell into negative territory a month later.
  • While KBRA is concerned about the change in growth rates for C&I lending, we believe that several caveats are appropriate, both with respect to bank earnings for 2H 2016 and also with respect to the demand for bank credit more generally.
  • While the drop in C&I loan growth may negatively impact bank earnings in 2H 2016, KBRA expects that the relative uptick in new mortgage originations and related business lines such as loan sales, warehouse lending to non-banks and loan servicing will contribute positively to bank earnings in Q3 2016 and the balance of the year.
  • While KBRA is concerned about the sharp downturn in C&I lending, the bigger point is that loan growth continues to be strong for the industry as a whole and even residential mortgage lending seems to have come back into vogue for many U.S. commercial banks.

To view the report, please click here.

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical:
Kroll Bond Rating Agency
Christopher Whalen, 646-731-2366
Senior Managing Director
cwhalen@kbra.com

Contacts

Analytical:
Kroll Bond Rating Agency
Christopher Whalen, 646-731-2366
Senior Managing Director
cwhalen@kbra.com