Concern about the effect of commercial real estate loans on U.S. commercial banks has been ongoing for years. But there has been growing evidence that conditions might not be as bad as many thought.
A new report from S&P Global Ratings said that the chance of CRE loan problems creating significant creditworthiness problems for banks “has declined.”
That doesn’t mean CRE problems are unlikely to continue negatively affecting credit metrics for U.S. banks over the next few years. They probably will. “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,” the company wrote. “This led us to revise our outlooks to stable from negative on six banks with material CRE exposures.”
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