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20% Becomes the Benchmark for Deteriorating Credit
Much ink — and blog space — has been spent on quantifying the deterioration in credit quality. However, it appears as though consensus is building around a drop in credit performance in the 20%-to-30% range.
To be more specific, both SunTrust Banks Inc. and US Bancorp have pegged the growth in their pools of trouble loans in third-quarter at above 20%. In the case of SunTrust, the bank expects a rise in nonperforming loans of 20% this quarter; US Bancorp says its nonperforming assets may increase 32%.
The US Bancorp number is clearly more shocking. Warren Buffett has in the past famously touted US Bancorp’s conservative banking practices. Buffett missed this one, apparently.
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