The loss allowance ratio for commercial real estate loans across U.S. banks dipped in the second quarter, mirroring a decline in delinquencies, according to S&P Global Market Intelligence. Money set aside to absorb charge-offs fell 8 basis points sequentially to 1.53% of outstanding commercial real estate loans to the lowest level since third quarter 2023. The allowance ratio across total loans also declined 6 bps to 1.78%.
Another S&P article noted the market value of banks' bond portfolios continued to improve in 2Q as interest rates fell. Expectations for a rate cut should deliver another boost in 3Q.
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