Bankers are most concerned about the impact of the novel coronavirus on commercial real estate and business lending, according to the latest survey of top bank executives by Promontory Interfinancial Network.
Nearly half of the CEOs, CFOs, and presidents of the 557 unique banks that responded to the second quarter survey said that CRE lending is most vulnerable to the economic fallout of COVID-19. Nearly a quarter of respondents said commercial and industrial lending was their top concern, followed by 16% who said consumer lending was most vulnerable.
The survey also found that many bankers believe the impact of the virus will extend beyond next year. More than a third said the business impact would last until 2022 and beyond. Slightly more than a quarter said it would last until the second half of 2021, while 28% said it would extend until the first half of 2021.
“Nearly six months since the virus first started spreading in the U.S., bankers are still trying to grapple with its impact on their customers and business,” said Mark Jacobsen, the cofounder and CEO of Promontory Network. “These results show that many believe the impact on the economy will be more pronounced than initially anticipated.”
Following are survey highlights:
OVERALL ECONOMIC OUTLOOK AND PROMONTORY NETWORK INDICES
Promontory Interfinancial Network’s proprietary Bank Experience IndexSM (a composite of access to capital, loan demand, funding costs, and deposit competition compared to 12 months prior), measured 56.1, an increase of 3.1 points from the previous quarter. On the metrics that make up Promontory Interfinancial Network’s proprietary Bank Confidence IndexSM (a composite of expectations for access to capital, loan demand, funding costs, and deposit competition looking 12 months ahead), this survey found a level of 52.8, an increase of 3.6 points from the previous quarter.
About Promontory Interfinancial Network, LLC
Promontory Interfinancial Network – the inventor of reciprocal deposits and the nation’s largest deposit allocation service provider – provides dynamic, all-weather balance sheet and liquidity management solutions to help financial institutions grow franchise value. The company, chosen by thousands of banks since its founding nearly two decades ago, has assembled the largest bank network of its kind. Its service offerings help institutions to acquire high-value, local relationships; purchase funding; and reduce collateralization costs.