DBRS Morningstar: Dutch Banks’ CRE Exposure – Risks Contained

DBRS Morningstar has published a commentary on Dutch banks’ exposure to commercial real estate (CRE). Commercial real estate (CRE) is a cyclical industry, which has previously led to outsized losses at Dutch banks, however current risks appear manageable despite the additional stressed caused by the COVID-19 pandemic.

Key highlights from DBRS Morningstar’s commentary include:
• The Dutch CRE market experienced significant price increases in recent years, which could reverse, but monetary and government policies have been supportive in the current crisis.
• CRE exposure and LTVs by Dutch banks are generally lower than in the previous crisis.
• There is very little standardised information publicly available in the Netherlands, related to the CRE sector in aggregate and for bank lending in particular. However, bank regulators have better information now that in past crises.

“Although the COVID-19 pandemic has increased risks for Dutch banks’ CRE lending portfolios, we view these risks as being well contained.” said Sonja Förster, Vice President from the DBRS Morningstar Financial Institutions team.

The commentary focuses on the commercial real estate risk of Dutch banks. The full commentary “Dutch Banks’ CRE Exposure – Risks Contained” is available at www.dbrsmorningstar.com.