U.S. Banks’ Asset Quality Improves With Less Net Charge-offs

Industry-wide net charge-offs declined 9 bps in the first quarter of 2014, reaching their lowest level since 2007, notes Barclays in their recently published analysis of U.S. Large-Cap and Mid-Cap Banks.

Jason M. Goldberg and colleagues at Barclays in their Equity Research report dated May 21, 2014, analyzed the Fed’s quarterly report on bank net charge-offs (NCOs) and delinquencies for 1Q14.

Broad-based improvement

The Barclays’ analysts point out that net charge-offs exhibited broad-based improvement. For instance, mortgage, CRE and other consumer and credit card all posted declines.

As can be deduced from the following table, all major categories are currently below their historical levels. For instance, CRE posted 0.06% in 1Q as against 29-year average of 0.67% and C&I posted 0.20% as...