News

Most Banks Left Standards for Business Lending Unchanged in Third Quarter - ABI

Most banks in the U.S. left their standards for lending to businesses little changed in the third quarter, according to the Federal Reserve’s latest survey of senior loan officers, the Wall Street Journal reported. Of those that changed their business-lending standards, more eased than tightened, the Fed said yesterday. More banks eased standards on commercial and industrial loans than tightened them in the third quarter, particularly in the case of large firms with more than $50 million in annual revenue, according to the survey, which was conducted in early October. The Fed’s senior-loan-officer opinion survey has, in the past, served as an early indicator when banks tended toward making riskier loans. Before the 2007-’09 recession, for instance, banks eased lending standards to businesses and narrowed the premium they charged for loans, even as demand for commercial and industrial loans was growing. The situation today is different. More loan officers surveyed reported business demand for loans weakening than strengthening in the third quarter. The most-cited reason for softer demand was that customer firms’ cash flow had improved, reducing their need to borrow.

Back to News »