Credit Risk for Big Bank Loans Still Moderate, US Regulators Say

“Credit Risk for Big Bank Loans Still Moderate” refers to US regulators’ latest assessment that large, syndicated bank loans at big banks are not currently showing signs of severe or systemic stress, even though conditions are more challenging than a few years ago. It means regulators see some weaknesses but overall view the risk level as manageable rather than low or high.​ 

What regulators are saying

• US agencies (the Federal Reserve, FDIC, and OCC) report that credit risk on large syndicated bank loans remains at a moderate level in their 2025 Shared National Credit Program Report.​

• These loans total about $6.9 trillion in commitments across nearly 6,900 borrowers, up roughly 6% from the prior year, so exposures are large but not deteriorating sharply.​

Why risk is only “moderate”

• Regulators note continued pressure from higher interest expenses and weaker operating margins for some borrowers, which could strain debt service.​

• At the same time, the share of loans needing “close attention” (criticized or special-mention credits) has edged down year on year, indicating some improvement in overall portfolio quality.​

What this implies for banks

• For big banks, a moderate risk assessment suggests capital and underwriting standards are, so far, sufficient to absorb expected losses in this loan segment.​

• Supervisors are still watching leveraged and higher‑risk borrowers closely, and continued macro stress (rates, growth) could push risk higher if conditions worsen.​

What it means for markets and borrowers

• For investors, a moderate risk environment reduces immediate fears of a credit crunch or wave of bank loan defaults, but does not rule out sector‑specific problems.​

• For corporate borrowers, banks remain willing to lend, but pricing and covenants are likely to stay tighter than in the pre‑rate‑hike era due to heightened but controlled risk perceptions.​