Banks are quietly underwriting the private credit boom.

Since 2016, U.S. bank lending to non-depository financial institutions (NDFIs) has surged nearly 300%, far exceeding growth in commercial, consumer, or real estate credit. Outstanding loans to NDFIs reached $1.14 trillion in Q1 2025, growing at an average annualised rate of 26% since 2012.

The lines between traditional banking and private credit are now blurred. Banks are no longer competitors, they’re financiers. Roughly $300 billion in loans now fund private credit managers, embedding leverage deep within the non-bank ecosystem (Moody’s report). This is symbiotic, but it’s not without risk.

Ultimately, the question is whether the system can absorb its own leverage when the cost of capital resets. As the cost of capital normalises, the advantage shifts to more disciplined lenders with rigorous underwriting, stronger structures, and patient capital.