US: Banks are alert to the deterioration of household credit quality
2025-02-13
■ The pace of loosening loan standards by US banks has slowed down
■ Banks expect the household loan environment to deteriorate and need to be vigilant about the instability of personal consumption
The Federal Reserve (FRB) of the United States released its latest Senior Loan Officer Opinion Survey (SLOOS) on the 3rd. The survey is a quarterly listening survey in which the FRB asks US financial institutions about changes in loan standards and capital demand. The surveyed financial institutions received the questionnaire on December 16 last year and submitted their answers by January 3.
For commercial and industrial loans (C&I loans) for large and medium-sized enterprises with annual sales of more than US$50 million, the loan demand difference index (DI) (the proportion of demand increase - the proportion of demand decrease) was 9.4, a significant increase from the survey in October last year (-21.3), indicating that loan demand is picking up. Judging from the responses of various banks, the number of banks that believe that loan demand has slightly decreased in the past three months has decreased, while an increasing number of banks believe that demand has slightly increased. Loan demand is slowly picking up, but the momentum is still insufficient. At the same time, the loan standard DI (ratio of tightening loan standards - ratio of loosening loan standards) was 6.2, higher than the previous survey (0) and back to the level of July-September last year (7.9). The loan standard is still in the tightening range, indicating that the pace of loosening loan standards has come to an end. The survey results show that more than 80% of banks said that the loan standards have not changed, almost no banks said that they have been loosened, and a slightly increasing number of banks said that the loan standards have been tightened.
In terms of household loans, although the demand for DI has improved, it has not fully recovered overall. Jumbo loans (-4.3 → -2) and auto loans (-12.8 → -3.8) for the wealthy class have both rebounded, but are still in the negative range. The demand for credit card loans (2.1 → -9.4) has fallen into the negative range. This indicates that the demand recovery is weak. In terms of loan standards DI, loan standards such as large housing loans (4.3 → 5.9) have tightened again, while credit card loans (18.4 → 9.4) and auto loans (4.1 → -3.8) have maintained a mild easing trend. During the period from July to September last year, the new delinquency rate increased month-on-month in auto loans (7.95% → 8.12%) and housing loans (3.35% → 3.60%), while credit card loans (9.05% → 8.79%) declined. The market is paying attention to the upcoming October-December data to observe the latest delinquency rate trends.
In addition, this survey also added questions about expectations for future loan standards. Banks generally expect that if the economy develops as expected, demand for all types of loans will increase, and the credit quality of most commercial loan categories will improve. However, credit quality in most household loan categories may deteriorate or remain unchanged. This shows that the household credit situation is a polarized trend, and banks remain vigilant about the instability of personal consumption and dare not take it lightly.
■ Banks expect the household loan environment to deteriorate and need to be vigilant about the instability of personal consumption
The Federal Reserve (FRB) of the United States released its latest Senior Loan Officer Opinion Survey (SLOOS) on the 3rd. The survey is a quarterly listening survey in which the FRB asks US financial institutions about changes in loan standards and capital demand. The surveyed financial institutions received the questionnaire on December 16 last year and submitted their answers by January 3.
For commercial and industrial loans (C&I loans) for large and medium-sized enterprises with annual sales of more than US$50 million, the loan demand difference index (DI) (the proportion of demand increase - the proportion of demand decrease) was 9.4, a significant increase from the survey in October last year (-21.3), indicating that loan demand is picking up. Judging from the responses of various banks, the number of banks that believe that loan demand has slightly decreased in the past three months has decreased, while an increasing number of banks believe that demand has slightly increased. Loan demand is slowly picking up, but the momentum is still insufficient. At the same time, the loan standard DI (ratio of tightening loan standards - ratio of loosening loan standards) was 6.2, higher than the previous survey (0) and back to the level of July-September last year (7.9). The loan standard is still in the tightening range, indicating that the pace of loosening loan standards has come to an end. The survey results show that more than 80% of banks said that the loan standards have not changed, almost no banks said that they have been loosened, and a slightly increasing number of banks said that the loan standards have been tightened.
In terms of household loans, although the demand for DI has improved, it has not fully recovered overall. Jumbo loans (-4.3 → -2) and auto loans (-12.8 → -3.8) for the wealthy class have both rebounded, but are still in the negative range. The demand for credit card loans (2.1 → -9.4) has fallen into the negative range. This indicates that the demand recovery is weak. In terms of loan standards DI, loan standards such as large housing loans (4.3 → 5.9) have tightened again, while credit card loans (18.4 → 9.4) and auto loans (4.1 → -3.8) have maintained a mild easing trend. During the period from July to September last year, the new delinquency rate increased month-on-month in auto loans (7.95% → 8.12%) and housing loans (3.35% → 3.60%), while credit card loans (9.05% → 8.79%) declined. The market is paying attention to the upcoming October-December data to observe the latest delinquency rate trends.
In addition, this survey also added questions about expectations for future loan standards. Banks generally expect that if the economy develops as expected, demand for all types of loans will increase, and the credit quality of most commercial loan categories will improve. However, credit quality in most household loan categories may deteriorate or remain unchanged. This shows that the household credit situation is a polarized trend, and banks remain vigilant about the instability of personal consumption and dare not take it lightly.