Harsh judgements: why Stateside lenders are upping the Q-factor
As CRE stalls, qualitative adjustments are forming a larger part of US banks’ credit risk allowances
At the end of January, shares in New York Community Bancorp tumbled after the lender posted an unexpected loss in its Q4 2023 earnings. The issue wasn’t a deal that had gone wrong for the bank or a bad bet coming back to bite it. In its earnings call, NYCB’s chief executive Thomas Cangemi – who has since resigned – told analysts the losses were due to “recalibrating our qualitative factors in the office portfolio to address [a loan] issue and increase the ACL [allowances for credit losses]
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