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MNI BRIEF: Fed Survey Shows Lending Standards Tightened In Q1

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Banks reported a further tightening of lending standards in commercial and industrial loans, small business credit as well as commercial real estate in the first quarter, according to the Fed's latest Senior Loan Officer Survey released Monday, likely reflecting the fallout from U.S. regional banking turmoil that led to a number of bank failures.

"Banks reported expecting to tighten standards across all loan categories" in 2023, the Fed report said. "Banks most frequently cited an expected deterioration in the credit quality of their loan portfolios and in customers' collateral values, a reduction in risk tolerance, and concerns about bank funding costs, bank liquidity position, and deposit outflows as reasons for expecting to tighten lending standards over the rest of 2023."

A similar trend was seen in loans to consumers. "Standards tightened for all consumer loan categories; demand weakened for auto and other consumer loans, while it remained basically unchanged for credit cards."

(See MNI INTERVIEW: Small, Midsize Credit Seizing Up, Says Kaplan)

Source: Federal Reserve

MNI Washington Bureau | +1 202 371 2121 |
MNI Washington Bureau | +1 202 371 2121 |

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