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APRIL 2024 SLOO: LARGE BANKS BUCK LENDING TIGHTENING TREND IN WEAKER DEMAND
ENVIRONMENT



Home / News & Resources / News / April 2024 SLOO: Large Banks Buck Lending
Tightening Trend in Weaker Demand Environment

Andrew Berlin

May 7, 2024 - The Fed published its April 2024 Senior Loan Officer Opinion
(SLOO) Survey on Bank Lending Practices yesterday that suggested most banks
continue to take a conservative approach to lending and borrowers are seeking
less credit. Responses were received from 66 domestic banks and 20 U.S. branches
and agencies of foreign banks.

Banks reported tighter standards and weaker demand for commercial and industrial
(C&I) loans in 1Q24, citing macro and industry-specific concerns, legislative
and supervisory actions impact, deteriorating liquidity positions, less
competition from other banks or nonbanks and decreased secondary liquidity for
C&I loans. Of the respondents, large banks (total domestic assets of $100
billion or more) reported that they did not change C&I lending standards and
most C&I loan terms while a modest share of foreign banks reported tighter C&I
lending standards and terms.

Respondents also reported tighter standards for all types of commercial real
estate (CRE) loans due to uncertainty around CRE market rents, vacancies, and
property values. Again, this was seen less in large banks but was experienced in
a significant share of foreign banks. Weaker demand was driven by higher
interest rates, fewer property acquisitions, and rental demand uncertainty.
Across CRE loan categories, respondents indicated that the most reported change
in CRE terms was interest rates.

Lending standards tightened across some categories of residential real estate
(RRE) loans while demand weakened for all RRE loans. Large banks reported easing
of standards for most RRE loans. The survey also showed tighter standards and
weaker demand for home equity lines of credit (HELOCs) and consumer loans,
including for credit cards and autos.

Though the trend has been toward tightening, the share of banks reporting
tighter lending standards in 1Q declined from 4Q23. 

Relatedly, BofA noted in a research report published today that loan exposure
decreased by about $17 billion across the top 100 U.S. banks
quarter-over-quarter. (Total assets for this group range from $19 billion to
$3.5 trillion as of 1Q24.) This figure partly comprises a $10.8 billion increase
in exposure to CRE/Farm/Multifamily loans (with roughly $4.4 billion due to the
acquisition by of Luther Burbank Corporation by Washington Federal Bank), a $4.2
billion increase in exposure to C&I loans and $34.7 billion decrease in exposure
to credit card loans.


FEATURED CONTENT

 * 1Q 2024 Trade Data Study
 * 2 Job Postings
 * Monthly MTM Pricing File
 * Member Spotlight – John Kim
 * Various Fitch Articles
 * Secondary Market Review *New*


NEWS

 * SIFMA on the Proposed Safeguarding Rule: Dodd-Frank Did Not Expand the SEC’s
   Authority May 9, 2024
 * BSL Returns Stay Positive in April Amid Downturn in Broader Markets May 8,
   2024
 * April 2024 SLOO: Large Banks Buck Lending Tightening Trend in Weaker Demand
   Environment May 7, 2024
 * LSTA Joins Letter to SEC on  Outsourcing Rule’s Dubious Statutory Authority
   May 6, 2024

All News


UPCOMING EVENTS

 * 2024 LSTA and LMA Joint New York Conference May 16, 2024 12:30 pm
 * Semi-Annual Oil & Gas June 2024 Update June 11, 2024 4:00 pm
 * Private Equity Investment Opportunities in Ukraine June 26, 2024 11:00 am
 * Summer Series 2024 July 15, 2024 4:00 pm

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 * About
   * Board of Directors
   * Executives
   * Committees & Working Groups
   * 2023 Year In Review
   * Join
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   * Sponsors
 * Advocacy & Regulatory
   * Key Issues & Topics
   * Submissions
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   * LSTA/LSEG Mark-to-Market Pricing Data
   * Morningstar LSTA Leveraged Loan Index Analysis
   * Fitch/Covenant Review Analysis
 * Legal & Documentation
   * Primary Market
   * Secondary Trading
   * Latin American Initiative
   * Shift Dates
 * Operations
   * Cost of Carry Calculators
   * Best Practices/Standards
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 * LSTA University
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   * Practical Law





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