Executive Summary
The banking system remains sound and resilient overall. Most banks continue to report strong capital levels above applicable regulatory requirements. Liquidity and funding conditions remain stable compared to 2023. Asset quality generally remains sound. However, credit performance in commercial real estate (CRE) lending and some consumer lending sectors continues to show signs of weakness. Banks are adding to credit loss reserves to protect against potential credit losses.
The Federal Reserve remains committed to improving the speed, force, and agility of supervision, as appropriate. The Federal Reserve continues to closely monitor risks to the banking sector, including credit, liquidity, and interest-rate risks.
This report focuses on developments in three areas:
- Banking System Conditions provides an overview of the financial condition of the banking sector.
- Regulatory Developments outlines the Federal Reserve's recent regulatory policy work.
- Supervisory Developments highlights the Federal Reserve's current supervisory programs and priorities.