1 Although capital ratios remain well above regulatory requirements, larger firms have seen a slight decline because of higher payouts and asset growth.Ĭapital serves as a buffer for the financial industry, enabling financial institutions to absorb losses that may result from unexpected operational, credit, or market events. While underwriting and risk-management practices generally have improved in agency-supervised institutions, trends in certain loan characteristics, such as fewer and less-stringent protective covenants, more liberal repayment terms, and incremental debt provisions, suggest vulnerabilities that may lead to increased risk of borrower default or loss. The Federal Reserve continues to monitor the risks from leveraged lending through the Shared National Credit (SNC) program and annual stress testing. Farmland and agricultural production loans are seasonally adjusted. Note: The nonperforming loan ratio is the ratio of loans 90 days or more delinquent and nonaccrual loans to total loans. Sectors with increasing nonperforming loan ratios Accessible Version | Return to text This measure has seen marked improvement during the past several years, ending 2018 at roughly 1 percent, below its five-year average of 1.6 percent ( figure 4).įigure 5. The lower this ratio, the fewer loans on which banks are unable to collect and the less risk to the overall financial system. The nonperforming loan ratio-the ratio of loans 90 days or more past due and those in nonaccrual status, to total loans-is an important measure of asset quality. Asset quality of the banking industry continues to improve overall.Īs lending expands, the Federal Reserve and other regulatory agencies continue to pay close attention to underwriting standards and the quality of loans that banks are taking onto their books. Banking organizations of all sizes have increased C&I lending, with smaller banks seeing stronger growth in recent years than their larger counterparts. C&I loans are currently one of the largest loan categories in the United States. Growth in this loan category is a key indicator of growth in the broader economy, though often with a lag. Note: Data are nominal and indexed to 2014:Q1.Ĭ&I loans, typically used to finance capital business operations and capital expenditures, tend to be more responsive to economic cycles. Loan growth by sector Accessible Version | Return to text Factors Affecting Reserve Balances - H.4.1įigure 3.Industrial Production and Capacity Utilization - G.17.Survey of Household Economics and Decisionmaking.Household Debt Service and Financial Obligations Ratios.Financial Accounts of the United States - Z.1.Statistics Reported by Banks and Other Financial Firms in the.Senior Credit Officer Opinion Survey on Dealer Financing.New Security Issues, State and Local Governments.Senior Loan Officer Opinion Survey on Bank Lending.Charge-Off and Delinquency Rates on Loans and Leases at.Assets and Liabilities of Commercial Banks in the U.S.Aggregate Reserves of Depository Institutions and the.Payments System Policy Advisory Committee.International Standards for Financial Market.Supervision & Oversight of Financial Market.Sponsorship for Priority Telecommunication Servicesįinancial Market Utilities & Infrastructures.Federal Reserve's Key Policies for the Provision of Financial.Regulation HH (Financial Market Utilities).
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