CRE and super-regional banks: what the latest data shows
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CRE and super-regional banks: what the latest data shows

The second-quarter earnings season saw more detail from US banks on how they are preparing for the worst in commercial real estate exposures. We look at how the data shapes up for the super-regional sector.

Office building, low angel view

If there was one thing that US bank investors wanted more information on in the latest earnings season, it was how exposed firms were to the troubles in commercial real estate (CRE). And banks generally complied, dripping out more data than they once did. For some this was the third season in which they had done so, meaning that a meaningful picture is starting to emerge of where exposures lie and how risky they are.

There was a timely reminder earlier this week of the pressure on the sector, as credit ratings agency Moody’s unveiled ratings downgrades on 10 small banks as well as putting some of the big super-regionals on review for downgrade or switching its outlook from stable to negative. One of the drivers Moody’s cited was exposure to commercial real estate.

Euromoney has sifted through the quarterly earnings reports of a sample of 11 of the country’s super-regional banks, plus Wells Fargo and Bank of America for comparison, and plotted the highlights and lowlights.

By way of a caveat, it should be noted that the sector is infamous for its wildly varying degrees of nuance. Offices come in many types, and banks classify them differently.

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