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CRE risk management: Navigating hazards and opportunities

Abrigo

WATCH Takeaway 1 Banks and credit unions are critical sources of capital for businesses in their communities, so how institutions assess CRE credits matters. Takeaway 3 Loan-level stress testing can help assess repricing risk, while capital stress testing helps clarify the impact of CRE loan losses on capital.

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How Loan Size Impacts Commercial Loan Profitability

South State Correspondent

When we analyze the same size/ROA relationship using banks’ efficiency ratios, it is not surprising that community banks (under $10B in asset size) have, on average, a 5% higher efficiency ratio than regional banks ($10B to $50B in asset size) as shown in the graph below. Larger loans have lower credit risk, all else equal.

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How Loan Size Impacts Commercial Loan Profitability

South State Correspondent

When we analyze the same size/ROA relationship using banks’ efficiency ratios, it is not surprising that community banks (under $10B in asset size) have, on average, a 5% higher efficiency ratio than regional banks ($10B to $50B in asset size) as shown in the graph below. Larger loans have lower credit risk, all else equal.

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How Singapore Is Fueling A ‘Smart Nation’

PYMNTS

Singapore is on a mission to build up a Smart Nation by utilizing innovation and technology to create opportunities and strengthen communities. Startups are estimated to employ nearly 300,000 on the island nation. Singapore is poised to become the world’s first country to make the notion of a “Smart Nation” an actual reality.

National 133
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Despite Plenty Of Concerns, SMB Optimism Holds Fast

PYMNTS

Amid a wave of new surveys released on small business sentiment, PYMNTS wades through the data to examine how entrepreneurs are handling the array of worries with which they must deal. Luckily, research from Bank of America, Wells Fargo, Capital One and others often point to one thing: Despite the challenges, small businesses are optimistic.

Taxes 105
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Goldman Sachs’ Singapore CEO Tapped By Julius Baer

PYMNTS

He previously held roles including head of Asia Pacific alternative capital markets in Hong Kong. “We With his extensive management experience and relevant market expertise, he is perfectly positioned to lead our important new Sub-Region,” he added. We are pleased to welcome Jason to Julius Baer.

Survey 100
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5 New Year’s Resolutions For Any Sized Bank That You Must Get Right in 2023

South State Correspondent

The irony here is that more than half the banks we recently surveyed had some goal and metric around asset growth. Because many banks are now producing below their cost of capital, growth further exacerbates their issues and drives them out of business (likely through a sale) faster. Noticeably absent from the list below is growth.