That's more than three times higher since a decade ago
United States banks’ exposure to private credit providers has soared to nearly $300 billion, according to a special report by Moody’s, as the sector’s rapid growth continues to reshape the nation’s lending landscape.
The trend has been driven by a decade-long surge in non-bank finance, with private credit assets under management tripling since 2015 — far outpacing other forms of credit and pushing banks to rethink their strategies in the face of tighter post-crisis regulations.
Banks have responded by ramping up loans to non-depository financial institutions (NDFIs), which reached $1.2 trillion as of June 2025 for domestically chartered US banks.
“Loans to NDFIs are now roughly 10.4% of total bank loans, nearly three times the 3.6% of a decade ago,” Moody’s said.
“Prolonged rapid loan growth, however, often signals increased levels of asset risk.”
Much of this lending is concentrated among the largest 25 US banks, including JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley. These institutions have the scale and infrastructure to manage the risks associated with lending to private credit funds, business development companies, and other non-bank lenders.
“Large banks may be better equipped to manage these risks because of their deeper relationships with private market participants and more robust controls and risk-management infrastructure,” Moody’s said.
But the report also flagged growing risks. “Aggressive growth and competition could weaken underwriting standards and elevate credit risk,” Moody’s said.
The recent bankruptcy of Tricolor, which resulted in significant losses for bank lenders, highlighted how even secured lending to NDFIs can go awry. “Underwriting and collateral controls can fail even when loans are secured,” Moody’s said.
Transparency remains a concern. While new reporting rules require banks with over $10 billion in assets to disclose NDFI exposures, Moody’s noted that “the disclosed categories are still fairly broad and indistinct, and the data is not reported at the consolidated, holding company level.”
Many private credit instruments are illiquid and opaque, with valuations often managed internally, making it difficult for banks and investors to assess true risk.
Banks’ lending to private credit providers, rather than directly to middle-market borrowers, offers some diversification benefit, but this is offset by the incremental leverage and lower transparency at the portfolio company level.
“These evolving dynamics underscore the need for vigilant credit risk management as private credit continues to scale up,” Moody’s said.
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