Banks expect deterioration in loan performance this year, Fed survey finds

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Banks expect that the performance of their existing loans will deteriorate somewhat this year on many different types of consumer and business loans.

As a result are tightening access to credit, according to a Federal Reserve survey of senior loan officers released on Monday.

The quarterly survey found that banks are expecting to tighten standards for business loans as well as credit cards and jumbo mortgages this year. Banks were already starting to tighten standards on credit cards in the fourth quarter, according to the survey.

The Fed surveyed officers at 73 domestic banks and 22 foreign institutions.

Asked about the quality of their loans over 2019, as measured by delinquencies and charge-offs, most banks said they expected the performance to remain unchanged. But in every loan category, either a “moderate or significant” net percentage of banks said they saw their loan performance would “deteriorate somewhat” this year. In contrast, no more than two banks reported they expected some improvement in any category.

Banks also reported they expected weaker demand for most loan categories.

Read more on MarketWatch

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