This story appeared in Bank Digest.
The Office of the Comptroller of the Currency has issued its "Semiannual Risk Perspective for Fall 2018," which covers risks facing national banks and federal savings associations based on data as of June 30, 2018. It focuses on issues that pose threats to financial institutions regulated by the OCC.
The OCC said that according to the report, credit quality remains strong, but the OCC is monitoring the origination quality of new loans, the potential for increased lender complacency within credit risk identification and management, and the potential embedded risks from successive years of eased underwriting.
In addition, the agency said, operational and compliance risks are elevated, and rising interest rates and increased competition for deposits may result in changes in funding mix or costs. The report also highlights the emerging risk posed by the growth in nonfinancial corporate debt and includes a credit underwriting assessment supplement.