Credit

A reasonable approach to comprehensive credit risk management can protect banks against the impact of a recession while ensuring the industry doesn't contribute to any potential economic volatility.

No one company can solve this credit scoring problem. Banks, fintechs and innovative startups must come together in partnership to share information and change the existing system.

The specter of an economic downturn looms, but many companies are still in growth mode, according to Donald McCree, head of commercial banking at the Rhode Island bank. "We continue to hear from a lot of companies that they are doing quite well," he said.

The rise of e-commerce during the pandemic has fueled demand for warehouse space as companies look to move their products closer to their customers. While a slight slowdown is now under way, bankers still see plenty of business ahead.

About 3% of borrowers in their 20s and 30s became seriously delinquent on their credit card payments last quarter, significantly faster than older consumers. The picture was similar in auto lending, according to research by the Federal Reserve Bank of New York.

After soured loans rose above the private student lender's expectations in 2022, its stock price fell 16% on Thursday. One analyst wrote that "persistent credit issues have damaged management's credibility."

Cleveland-based KeyCorp posts a subdued profit in the wake of a loan loss provision that was more than six times greater than the level of fourth-quarter net charge-offs.

The company, which interprets foreign credit bureau data, is opening its first outpost outside of the U.S.

The Pittsburgh bank posted a solid profit and said that it expects continued loan growth. But the pace of business expansion could slow alongside an economic downturn.

For the fourth straight quarter, the nation's largest bank boosted its loan-loss reserves, this time setting aside $1.4 billion to cover potentially souring loans. Other big banks made similar moves as the industry braces for a potential recession.

The acting comptroller of the currency said new CECL standards will help banks weather current economic uncertainty. He also touted the benefits of diversity in risk management.

During the third quarter, the industry braced for a potential recession by making it harder for borrowers to access credit, according to a new Federal Reserve survey. Bankers indicated that they are ready to take stronger action in a downturn that many of them now see as likely.

Executives from PNC, Regions and M&T are expressing confidence that their loan books can withstand a recession. "We don't see crisis-type things in front of us right now," said PNC Chief Financial Officer Robert Reilly.

Credit bureaus should know better than to include "impossible" data, such as someone defaulting on a loan before they were born, says Consumer Financial Protection Bureau Director Rohit Chopra.

Overdue loans for U.S. credit unions hit 0.42% in June — the lowest level in the industry's history. But some warn of deteriorating credit quality as the economy sours.

Executives at the Dallas company said they feel positive about the remainder of the year, though declining deposits could create issues going forward.

The megabank set aside a larger provision for credit losses during the third quarter as delinquency rates in its credit-card business ticked higher. Still, executives argued that the U.S. consumer outlook remains strong.

The nation's largest bank by assets cited a weakening economic outlook as one reason it added to its allowance for loan losses for the third straight quarter. But its third-quarter results beat analysts' expectations.

The London bank is working with Nova Credit to accept immigrants' credit histories from their home countries. It also invested $10 million in the company.

Millions of Americans have trouble accessing low-cost loans because they have thin or problematic credit histories. That could change as fintech innovations and new self-reporting tools give lenders troves of new data.