US Banking Watchdog Flags Rising Credit Stress as Shared National Credit Exposure Hits $6.9 Trillion in 2025

The US banking system is showing early signs of rising credit stress as total Shared National Credit (SNC) commitments climbed to a record $6.91 trillion in 2025, according to the latest annual review released by the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency.

The report reveals that while overall lending expanded by 6% year-on-year, non-performing risk indicators worsened, with nonaccrual commitments jumping over 30% to $84.9 billion — a key warning signal for lenders and regulators.

Credit Quality Under Pressure

Although total commitments increased from $6.52 trillion in 2024 to $6.91 trillion in 2025, the quality of that credit has weakened:

• Special mention + classified loans stood at $592.9 billion,

• Classified commitments rose to $437.5 billion,

• Nonaccrual loans surged from $65.1 billion to $84.9 billion.

Analysts say this reflects growing stress across highly leveraged corporate borrowers amid elevated interest rates and slowing global growth.

Leveraged Lending Remains a Key Risk Zone

Total leveraged lending exposure rose to $3.08 trillion in 2025. While special mention leveraged loans declined, classified leveraged commitments increased to $373 billion, indicating rising risk in corporate credit markets.

Non-investment grade term loans, mostly held by other investors, accounted for a significant portion of this risk.

Technology and Financial Sector Drive Growth — and Risk

The largest concentration of credit remains in:

• Financial firms (excluding banks): $1.32 trillion

• Technology, telecom and media: $1.11 trillion

• Real estate & construction: $566 billion

• Utilities: $476 billion

At the same time, sectors such as technology, commercial services, materials and consumer services recorded notable increases in classified exposures — a trend regulators are watching closely.

Who Holds the Risk

By ownership in 2025:

• US banks: 44.6%

• Foreign banks: 33.9%

• Other investors: 21.5%

However, other investors hold over 60% of all problem loans, making them the most exposed to deterioration in credit quality.

Regulators Tighten Oversight

The agencies said the 2025 SNC review reflects a more detailed sector-level analysis and enhanced transparency as they seek to monitor systemic risk and ensure stability in the world’s largest credit market.

With global uncertainty, sticky inflation and refinancing pressures rising, regulators cautioned that credit conditions could deteriorate further in 2026 if macroeconomic headwinds intensify.