For loans, banks in 4Q ’17 eased standards for C&I, tightened benchmarks for commercial real estate

Banks on balance eased their standards and terms on commercial and industrial (C&I) loans to large and middle-market firms while demand for such loans was basically unchanged, the Federal Reserve said in its January survey of senior bank lenders.

Meanwhile, the report stated, banks’ standards for most categories of commercial real estate (CRE) loans tightened, while demand for CRE loans reportedly weakened.

The January 2018 Senior Loan Officer Opinion Survey on Bank Lending Practice, which reports on bank officers’ views from mostly the fourth quarter of 2017, also noted that for loans to households, bank lending standards for consumer and most residential real estate loans remained “basically unchanged” over the third quarter of 2017. Banks reported weaker demand for auto loans and residential mortgages, the report stated.

According to the report, banks also responded to a set of special questions inquiring about their outlook for lending policies and loan performance over 2018. Among the results:

  • Banks expect to ease standards on residential mortgages and C&I loans to large and middle-market firms …
  • … while expecting to tighten standards on CRE loans and credit card loans.
  • Demand for C&I loans is also expected to strengthen on net.
  • Banks anticipate that loan performance will improve, on net, for C&I loans while deteriorating for consumer loans.
  • The performance of most categories of loans backed by real estate is expected to remain basically unchanged on net.

January 2018 Senior Loan Officer Opinion Survey on Bank Lending Practices

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