July 01--Banks are taking greater lending risks, and consumers continue to be vulnerable to cyberattacks at their financial institutions, according to a semiannual report issued Tuesday by the U.S. Office of the Comptroller of the Currency.
The banking regulator said it's seeing a "loosening of standards" across a "variety of credit products," including loans for businesses, for commercial real estate borrowers, and for people buying vehicles.
"Bankers continue to express concerns about the effects that intensified competition with other regulated financial institutions and nonbank financial firms are having on underwriting standards," the comptroller wrote.
To deal with competitive pressures and to cut costs, banks are increasingly using such technology as cloud computing and mobile banking -- "which can increase exposure to technological and operational risk," the comptroller said. "Banks and their employees, customers and third-party service providers continue to be vulnerable to cyberattacks that can compromise data or systems or allow criminals to illegally obtain personally identifiable information."
Auto loan growth remains strong, and loan performance appears "reasonable," but the comptroller said it's closely monitoring those credit practices, including the offering of vehicle loans with larger balances.
Extending loan terms is one way lenders are lowering monthly payments for vehicle buyers, "and this can increase risk to banks and borrowers," the comptroller said. About 60 percent of auto loans originated in the fourth quarter of 2014 had a term of 72 months or more. "Extended terms are becoming the norm rather than the exception and need to be carefully managed."
byerak@tribpub.com
