FDIC Risk Review Assesses Bank NDFI Loan Exposure

The FDIC published its annual review of funding, interest rates, and credit risks for the banking system this week. On loans to non-depository financial institutions (NDFI), the report concludes, “The composition and structure of bank loans to NDFIs generally exhibit a lower degree of credit risk.

Supervisory observations reflect strong historical performance and more favorable credit ratings for bank loans to NDFIs compared to traditional commercial loans.” Consistent with our prior reporting, the report finds NDFI non-performing loan rates remain well below other institutional borrower lending categories.