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Report Says U.S. Banks Can Better Withstand Commercial Real Estate Stress
Staff Report//February 20, 2025//
Report Says U.S. Banks Can Better Withstand Commercial Real Estate Stress
Staff Report//February 20, 2025//
Listen to this articleS&P Global Ratings believes commercial real estate (CRE) will likely continue to hamper asset quality credit metrics for U.S. banks over the next few years, particularly for those that are more heavily exposed to this asset class, said a report published titled “U.S. Banks Are Better Positioned To Manage Commercial Real Estate Risks.”
However, in our view, the probability that problems in CRE will lead to a material weakening in the creditworthiness of rated banks has declined over the last year. This led us to revise our outlooks to stable from negative on six banks with material CRE exposures.
Although we expect CRE charge-offs to continue, due to a combination of CRE price stabilization and balance sheet improvement, even banks with more concentrated exposure to CRE loans should be able to better absorb such losses without substantially affecting earnings. Most banks we rate have increased their capital and deposits, and have reported declines in unrealized losses on securities, all supporting financial strength. This report does not constitute a rating action.
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