Credit Benchmark, the provider of global consensus ratings and analytics, today said that the low 0.6% default rate among US financial institutions is likely to rise to 0.7% in 2024 and could go higher as lower interest earnings and higher loan-loss provisions dent the medium-term improving trend.

“We expect credit deterioration among US financial institutions to be modest, peaking at 0.7% in 2024 and improving thereafter — but there is a 15% likelihood of the default rate reaching a high of 0.9%,” says Michael Crumpler, CEO of Credit Benchmark. “While the proportion of US financial institutions positioned in the ‘c’ rating category remains very low, our projections imply a small increase in the higher ‘b’ category as the slowing economy hits US regional banks and medium-sized insurers.”

The US financial institutions sector is one of 13 US industries discussed in Credit Benchmark’s new 2024 Default Risk Outlook. Credit Benchmark predicts that most other US industries will record a slightly higher rise in their default rates this year, with the US telecoms sector projected to record the largest increase in default rates. However, the oil & gas industry is predicted to record a drop in its default rate, a positive outlier among Credit Benchmark’s projections.

According to Credit Benchmark’s new report, default risks are likely to continue to rise and then peak by mid-2024 across most US industries. However, credit quality should recover in H2 2024, assuming that the Fed adopts a more accommodative monetary policy and barring any further escalation of geopolitical risks.

Credit Benchmark’s new report covers 13 US industries, representing around 13,000 entities, 70% of which are not rated by a credit rating agency. This significant coverage allows Credit Benchmark to make credible sector-specific default risk projections for 2024.

All of Credit Benchmark’s data and projections are based on borrower probability-of-default estimates, which are aggregated from over 40 global banks, nearly half of which are GSIBs (Global Systemically Important Banks), and anonymized.

Note to Editors:

About Credit Benchmark

Credit Benchmark provides Credit Consensus Ratings and Analytics that are calculated by using the data and internal credit risk ratings contributed by more than 40 leading global financial institutions, almost half of which are Global Systemically Important Banks (GSIBs).

The contributions are aggregated, anonymized, and published twice monthly in the form of unique Credit Consensus Ratings and Credit Indices. This means that Credit Benchmark is making the views of far more analysts publicly available than ever before.

Covering over 100,000 entities, 90% of which are unrated by any other publicly available traditional ratings methods, Credit Benchmark’s credit risk data covers around 170 countries and close 200 industries and sub-sectors worldwide.

Credit Benchmark’s insights are trusted by a host of the largest financial institutions in the world, either to benchmark their own internal credit risk analysis against those of a global peer group, or simply to gain accurate credit risk views where none were previously available.

Credit Benchmark was founded in 2015 and is headquartered in London, with offices in New York and Bangalore.

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