How are you managing credit risk? 

5/29/2020
How are you managing credit risk?

With skyrocketing unemployment rates and whole industries slowing to a crawl, how is the financial sector addressing problem loans? We asked, you answered.

What strategies do you have in place to help customers survive this credit crunch?

 
The number of banks already offering loan alterations and troubled debt restructurings (TDRs) was surprising. These offerings were expected later in the year, after some of the longer-term economic outcomes from the pandemic become evident.

What strategies do you have in place to help customers survive this credit crunch?

How are you addressing the changes in environment and affected exposures in your portfolio?

How are you addressing the changes in environment and affected exposures in your portfolio?

 
Many banks began addressing the changing environment and affected portfolio exposures at the end of the first quarter with qualitative adjustments to ACL. Now, more banks are increasing disclosures in affected industries, establishing more quantitative support for related ACL adjustments, conducting more sensitivity testing, and performing targeted loan reviews.

How would you describe your risk rating activities for individual loans in the last month?

 
Many banks haven’t yet adjusted risk ratings to reflect the known deterioration in business conditions, but they’ll need to collect the necessary information and mobilize the resources needed to assess the ratings on a wide swath of their portfolio.

How would you describe your risk rating activities for individual loans in the last month?

How are you preparing for an influx in problem loans and refinancing?

How are you preparing for an influx in problem loans and refinancing?

 
Despite being knee-deep in PPP forgiveness, banks are realigning resources and investing in technology to make their process more efficient.

Survey response data is from attendees at our webinar, “Contending With Today’s Portfolio Vulnerabilities to Manage Risk,” on May 15, 2020.

Watch the webinar recording for more on this topic

Want more insights on addressing coronavirus-related challenges?
Go to the Crowe COVID-19 resource center for more analysis and updates.