Some big banks trimmed their stockpiles that guard against loan losses in the fourth quarter, but overall allowances fell less than many observers predicted. The trend will likely continue given uncertainties surrounding vaccine distribution and the economy.
For now, banks say they have no plans to curtail lending to oil and gas firms, but recent moves by the new administration — including a halt in drilling on federal land and an effort to stop the Keystone XL Pipeline — could cause them to re-evaluate their long-term commitment to the fossil fuel industry.
The Indiana company, which had relied on internal processes that focused on large loans, has bought a suite of software tools to begin looking at relationships based on underlying risk.
The bank's nonaccrual loans have been soaring as the pandemic continues to roil the hospitality sector. M&T executives said they've been working with borrowers to keep them out of foreclosure.
The Dallas bank says reserves could return to pre-pandemic levels by the end of 2021— a year earlier than analysts were predicting — if vaccines prove effective at slowing the spread of the coronavirus.
Federal relief efforts have minimized loan losses so far, but risks remain in credit card, auto and business lending. Many borrowers will need another lifeline to stay afloat until the economy rebounds, CEO Jamie Dimon says.
Commercial real estate portfolios have held up better than expected during the pandemic. But rising delinquencies and fears of a delayed economic recovery are renewing questions about credit quality.
