America’s largest financial institutions are grappling with a significant increase in delinquent loans, according to a recent report by S&P Global. Commercial and industrial (C&I) loan delinquencies surged in the fourth quarter of 2024, even as the total value of these loans declined.
Delinquent C&I loans rose by 6.4% compared to the previous quarter and 19.8% year-over-year, reaching $31.04 billion—equating to a delinquency ratio of 1.31%. This sharp increase highlights growing financial stress in the commercial sector, with major banks like JPMORGAN CHASE, BANK OF AMERICA, WELLS FARGO, CITIGROUP, and GOLDMAN SACHS collectively holding $11.8582 billion in delinquent C&I loans.
The broader C&I loan balance across U.S. banks fell by 5.2% quarter-over-quarter and 4.3% year-over-year, settling at $2.371 trillion. This drop was partially attributed to a regulatory reclassification that excluded margin loans from the C&I category.
Bank executives have observed muted lending demand and cautious borrower behavior, reflecting broader economic uncertainties. JENNIFER PIEPSZAK, COO of JPMORGAN CHASE, noted that much of the recent activity has been refinancing rather than new loan growth, describing it as a “wait-and-see” approach among businesses.
Meanwhile, JOHN STERN, CFO of U.S. BANCORP, identified “pockets of growth” in corporate and middle-market lending but emphasized that growth remains inconsistent. He suggested that more economic clarity might emerge in the second half of the year.
The rise in delinquencies underscores the challenges faced by the banking sector as it navigates an uncertain economic landscape. Industry leaders remain vigilant, balancing risk management with strategic lending opportunities.