The Office of the Comptroller of the Currency (OCC) has released findings from a report examining the COVID-19 pandemic’s impact on the federal banking industry.
The OCC’s Semiannual Risk Perspective for Fall 2021 determined that banks are withstanding the COVID-19 pandemic resiliently with satisfactory credit quality and strong earnings while acknowledging a minimized loan demand and low net interest margins (NIM) continue to weigh on performance.
The report’s focus areas include operating environment, bank performance, special topic on community banks, trends in key risks, and supervisory actions. The report targets issues posing threats to financial institutions regulated by the OCC.
According to the analysis, operational risk is on the rise amid banks responding to the advent of more complex operating and cyber risks; credit risk is moderate because of widespread government programs and appropriate risk management limiting the potential credit impact; compliance risk is increasing, with the action being attributed to regulatory changes and policy initiatives continually challenging risk management; and banks are taking actions to offset earnings impacts of low yields while NIM compression remains a risk.
The scope of work covers risks facing national banks and federal savings associations based on data as of June 30, 2021.