Shared National Credit Review Finds Some Improvement in Credit Quality, Risk Remains Elevated in Leveraged Loans — 2019-01-25

Federal banking agencies find that risk in the portfolio of large syndicated bank loans has declined, due to improving conditions in most sectors. Despite the improvement, the dollar volume of loans rated below "pass," as a percentage of total loans, remains elevated compared with levels experienced in prior economic cycles, according to the Shared National Credit (SNC) Program Review. The report--released today by the Federal Reserve Board (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC)--reflects the results of reviews in 2018 covering SNC loans originated by or before March 31, 2018. Furthermore, the review finds increased risks associated with leveraged lending. The agencies remind banks to update credit risk management practices as the risk profile of borrowers and the industry changes.