Loan exposure to single clients by Canadian banks has decreased, while U.S. banks’ exposure has increased, according to a new report from Moody’s Investors Service.

Moody’s surveyed the North American banking universe to monitor the comparative size of the banks’ exposure to single clients — or “loan granularity” — because of the potential risks inherent in such concentrations. This year’s survey shows that banks’ single-client exposures increased in the U.S., but slackened somewhat in Canada.

“At year-end 2004, loan granularity faltered for US banks compared with their overall 2003 position,” says managing director Greg Bauer. Out of the total of U.S. and Canadian banks, the report points out that 62 banks deteriorated in terms of loan granularity over last year’s number, but 35 showed improvements.

“Canadian banks reported a second consecutive yearly improvement,” Bauer states, “but the improvement was less than the dramatic yearly improvement that occurred during 2003 over the prior year.”

Canadian banks’ loan granularity is now better than the universe of rated U.S. banks, when related to core earnings, he adds. The difference between the overall Canadian and US granularity measures has narrowed significantly in the past two years, however. “Moreover,” Bauer says, the Canadians’ loan granularity remains inferior overall to similarly rated U.S. institutions.’”