The Risk Management Association (RMA), in alliance with Automated Financial Systems, (AFS), has released second-quarter 2009 Risk Analysis Service (RAS) data. Reportedly, the industry’s credit risk benchmark, RAS metrics on commercial credit risk reveal continued deterioration in the middle market.
The results reflect portfolio data for middle market exposure provided by 17 top-tier participating institutions, estimated to represent more than half of all middle-market commercial loans in the US.
It has said that business banking credit quality is showing greater stress than the middle market. Nonaccrual business banking loans total 3% of total outstanding balances, 33% higher than middle market levels. Short-term delinquencies (30 to 89 days) were 1.8% for business banking loans, nearly double the level for middle market delinquencies. Finally, the amount of business banking loans classified as either substandard, doubtful, or loss were 30% higher than those in the middle market portfolio.
Ken Chalk, interim RMA president and CEO, said: “The rising level of non-accruing assets in the commercial loan portfolios is consistent with where we are in the credit cycle. These levels may rise through the end of the year, given the current state of the economy. On a more positive note, short-term delinquencies have eased from the first quarter levels. We will need another quarter’s data to determine if we have reversed the trend of rising delinquencies.”
The Risk Management Association, headquartered in Philadelphia, Pennsylvania, is a not-for-profit, member-driven professional association that offers risk principles to the financial services industry.
