Overall, loan books at the big US banks are still in decent shape. Keefe, Bruyette & Woods expects net charge-offs (NCOs) as a proportion of loans to fall next year, from an average of 0.61 per cent to 0.59 per cent, at Bank of America, Citigroup, JPMorgan Chase and Wells. That group's average NCOs had peaked at 3.43 per cent in 2009 and 2010.
But at a conference in New York last week, BofA chief executive Brian Moynihan noted that some energy loans had moved to "classified" status — and thus in danger of default — while Andy Cecere, chief operating officer at US Bancorp, the number five lender by assets, said the bank had seen a "modest uptick" in net charge-offs, largely related to energy.
Dallas-based Comerica, one of the banks most exposed to energy, said that it was "carefully monitoring" its energy portfolio but had not seen any losses in its direct exposures. It noted that many of its clients continue to have access to capital markets as well as significant hedges in place throughout next year, which would help offset a prolonged slump in prices.
Energy "continues to be a headwind", said Richard Ramsden, banks analyst at Goldman Sachs.