US Banks Loan $4 Billion to Cover Bad Consumer Debts
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Four large US banks – Bank of America, JPMorgan, Citigroup and Wells Fargo – in the fourth quarter in total singled out more than $4 billion to cover bad loans. Experts see this as the preparation of banks for a recession – they expect more overdue and unpaid loans. For comparison: in the fourth quarter of 2021, when the US economy was growing, all banks were reducing such reserves. JPMorgan postponed the most – $1.85 billion. Bank of America allocated $1.1 billion for this, Wells Fargo – $957 million, Citigroup – $640 million.
These four banks submitted Friday reporting. Many of them have lost quarterly and/or annual profits: banks are losing income from commissions for securities offerings and intermediary services for mergers and acquisitions in the face of a decrease in the number of transactions and a declining stock market. At the same time, some banks manage to compensate for this by increasing income from interest on loans in the face of an increase in the key rate. After the publication of financial statements, the shares of all four banks were declining, but by the end of trading they recovered and grew. “People have actually realized that banks are likely to continue to generate some pretty good returns throughout 2023,” Richard Ramsden, Goldman Sachs Senior Banking Analyst, commented.
Two more major US banks, Morgan Stanley and Goldman Sachs, are due to report next week.
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