Infusions Help U.S. Banks, But Loan Losses Still Surge

Big, complex bank holding companies are being helped by the U.S. Treasury’s massive liquidity infusions, and both credit market conditions and confidence are improving, helping to brighten the long-term outlook.

But neither of those developments will stem the rising tide of loan losses for banks, which are rising and are expected to accelerate in 2009, said Standard & Poor’s Credit Research.

We expect credit losses and nonperforming assets to rise and remain high through 2009. In our view, this is especially true for all consumer loan categories–including credit cards–and for commercial loan categories most at risk in the challenging economic environment.

The ratings agency expects credit card losses in particular to exceed previous recession highs.

S&P said it will complete its credit reviews of the major U.S. banks, in light of “transformational” acquisitions in the sector, with any change in bank ratings to be announced in the next several weeks.

For details, see “Industry Report Card: Large Complex Banks Report Dismal Third-Quarter Results, but Future May Brighten”