Major US banks are facing a surge in unpaid business loans, totaling a whopping $11.86 billion.
Souring Loans
According to a recent report, commercial and industrial (C&I) loan delinquencies skyrocketed in the last quarter of 2024. This represents a 6.4% increase from the previous quarter and a nearly 20% jump year-over-year. The total value of delinquent C&I loans reached $31.04 billion, a significant rise despite a slight overall decrease in the total amount of C&I loans issued.
JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, and Goldman Sachs are among the hardest hit, collectively shouldering the burden of the $11.86 billion in bad debt.
What’s Going On?
While the total amount of C&I loans decreased slightly, the increase in delinquencies paints a worrying picture of the commercial sector. Bank executives are reporting less demand for new loans and a general hesitancy among businesses to borrow.
JPMorgan Chase’s COO noted that much of the recent activity has been refinancing existing loans, rather than taking out new ones, suggesting a “wait-and-see” approach by businesses. Other banks are seeing some growth in certain areas, but overall lending remains inconsistent. There’s hope for more economic clarity later in the year.
The Bottom Line
The rise in delinquent loans is a clear sign of stress in the commercial lending market. While the overall loan volume is down slightly, the significant increase in bad debt is a major concern for these large financial institutions.
