The events of 2023, both within the banking industry and beyond, are chilling traditional growth opportunities and providing new challenges for banks. We are seeing adverse trends in the areas of asset quality, litigation, liquidity, third-party relationships and compliance that are headwinds for banks. Nevertheless, many of these issues can be mitigated in 2024 by enhancing risk management practices and engaging in traditional safe and sound banking practices.
Asset quality measures. With higher interest rates and economic uncertainty, loan workouts are steadily increasing. We are seeing proactive banks reviewing their borrowers and their collateral, bolstering protective provisions in their loan documents to prevent surprises and taking actions now to limit their risk, rather than risk surprises.
