Bank lending officers report tighter standards for C&I loans in face of weakening demand

Tighter standards and weaker demand for commercial and industrial (C&I) loans to firms of all sizes over the fourth quarter were reported by bank senior loan officers, according to survey results issued Monday by the Federal Reserve.

The Senior Loan Officer Opinion Survey (SLOOS) for January issued by the Fed also reported tighter standards and weaker demand for all commercial real estate (CRE) loan categories.

The SLOOS, conducted quarterly by the agency, addresses changes in the standards and terms on, and demand for, bank loans to businesses and households over the previous three months.

In other areas, the report stated that for loans to households, banks reported lending standards tightened across all categories of residential real estate (RRE) loans other than government residential mortgages and government-sponsored enterprise (GSE)-eligible residential mortgages, for which standards remained basically unchanged, the report stated.

Meanwhile, demand weakened for all RRE loan categories, the Fed said. In addition, banks reported tighter standards and weaker demand for home equity lines of credit (HELOCs). Moreover, for credit card, auto, and other consumer loans, standards reportedly tightened, and demand weakened on balance, the survey found.

“While banks, on balance, reported having tightened lending standards further for most loan categories in the fourth quarter, lower net shares of banks reported tightening lending standards than in the third quarter across all loan categories,” the survey reported.

January 2024, Senior Loan Officer Opinion Survey on Bank Lending Practices

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