Many analysts anticipated a downturn in credit quality in the third quarter, but New York-based CIT Group Inc. has maintained strong credit quality, management said on its third-quarter earnings call.
The bank's provision for credit losses for the quarter was $27 million, and net charge-offs declined to $26 million quarter over quarter, below guidance range, management said on the call.
Chairwoman and CEO Ellen Alemany said that customers have been "cautious with capital spending," and the bank has observed "anecdotally" that tariffs are affecting businesses, but the bank has exited certain credits, done additional stress testing and entered into more renewable energy credits to help combat a downturn in credit quality. Alemany pointed out that the company has less exposure to consumer debt and residential mortgages than some of its peers.
Analysts said that credit quality could lower margins in the third quarter, particularly at regional banks, which tend to be more concentrated in specific sectors. Energy credits affected Texas banks in the second quarter.
But, so far, CIT has not experienced this. "We don't see any specific indicators that suggest any type of a credit downturn," Alemany said.