The IRA Bank Book Q4 2025: Credit Defaults Fall, Market Risk Grows

December 1, 2025 | We have published the latest edition of The IRA Bank Book for Q4 2025. Entitled "Defaults Fall, Market Risk Grows," the report details how indicators of consumer credit risk are falling even as risk to financial markets from institutional and commercial credit, crypto tokens and market exposures grow. Bank income has reached record levels in Q3 2025, but what happens in Q4 2025 and 2026?

The flow of bank loans supporting private equity, credit strategies and crypto offerings continued to grow in Q3 2025, although the rate of increase is naturally slowed as the size of the bubble in non-depository financial institutions (NBFIs) expanded. As in Q2 2025, the largest bank portfolio increases reported by the FDIC are in loans to NBFIs and broker-dealer loans to purchase or carry securities, including margin loans. Many large securities dealers that extend margin credit are affiliates of big banks.

Source: FDIC

The WGA report notes that the market performance for the banks in the WGA Bank Top 50 continues to be strong despite the selloff in early November. SoFi Technology (SOF) leads the pack up 85% YTD as of the end of November. Goldman Sachs (GS), Morgan Stanley (MS) and Citigroup (C) continue to lead the larger group. Lending Club (LC) was #2 behind SOFI at the end of November, the report notes. The top ten bank stocks in the WGA Bank Top 50 as of November 28, 2025, are shown below:

Source: Yahoo Finance

Margin credit in the US reached another new peak in October 2025. While rising margin debt can reflect investor confidence, we see it as a warning sign of excess speculation, potentially increasing market risk for depositories. The selloff in AI stocks and crypto tokens in the first two months of the fourth quarter may result in credit losses to banks and dealers.

Source: FINRA

Copies of The IRA Bank Book for Q4 2025 report are available to subscribers to the Premium Service of The Institutional Risk Analyst. Stand alone copies of the WGA report are also available for purchase in our online store. Media wishing to receive a courtesy copy of the report please email us: info@rcwhalen.com

Premium Service subscribers may download the new report below.

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