Federal Reserve Board and other federal banking agencies report moderate risk in USD 6.5 trillion shared national credit portfolio as non-pass loans edge up to 9.1%

The Federal Reserve Board, with other federal banking regulatory agencies, published the 2024 Shared National Credit (SNC) report, concluding that credit risk in large, syndicated bank loans remains moderate while credit quality trends continue to weaken. The report links the deterioration to higher interest rates pressuring leveraged borrowers and compressed operating margins in some sectors, and notes that 2025 risk will depend on borrowers’ ability to manage interest expenses, real estate conditions, and other macroeconomic factors. The review covered SNC loans originated on or before June 30, 2024, with a focus on leveraged loans and stressed borrowers, and assessed shared commitments of USD 100 million or more held by multiple regulated financial institutions. The SNC portfolio comprised 6,699 borrowers with USD 6.5 trillion in commitments, up 1.8% year on year; non-pass loans (special mention and classified) increased to 9.1% of total commitments from 8.9%. US banks held 45% of total SNC commitments but 23% of non-pass loans, while leveraged exposures represented nearly half of total commitments and 79% of non-pass loans.