By The Daily Hodl - 3 months ago - Reading Time: 2 minutes
JPMorgan Chase, Bank of America, Wells Fargo and Citigroup Risk Losing $24,400,000,000 As Number of Troubled Loans Erupt: Report
Optimism in the US banking industry is being threatened by a growing pile of bad loans, putting pressure on the sector’s biggest players.
Bloomberg analysts say non-performing loans, or loans to debtors that haven’t made a payment in over 90 days, rose to a combined $24.4 billion in the last quarter of 2023 for JPMorgan Chase, Bank of America, Wells Fargo and Citigroup, reports the Financial Times.
The numbers represent a $6 billion increase year over year.
Bank earnings likely shrunk in the final three months of 2023 due to the unpaid loans, plus the rising cost of deposits stemming from higher interest rates, the analysts say.
FT reports that the banks are taking several cost-cutting measures to deal with the new business climate. Citigroup is reportedly taking a hit to deal with layoffs and related expenses, while Wells Fargo has already set aside $1 billion for severance packages.
Despite the rise in bad loans, the biggest banks in the US have signaled that they’re expecting a shift in trend by reducing how much capital provisions they set aside for future non-performing loans.
Desmond Lachman, former Deputy Director at the International Monetary Fund’s (IMF) Policy Development and Review Department, recently said regional banks are also in a precarious position, with about 18% of their loan portfolios in the troubled commercial real estate industry.
Says the IMF insider,
“Major property investors, such as Brookfield and Blackstone, are starting to walk away from their mortgages, Lachman noted.
The scenario makes it more likely that commercial property owners will, possibly by next year, start defaulting on their loans. That would be very bad news for small and mid-size banks.”
In Q3 of last year, reports surfaced that US banks were facing “charge-offs,” or losses on loans that have been designated as unrecoverable at a 17% higher rate than the previous three months, and a 75% higher rate than 2022.
Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inboxCheck Price Action
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
Check Latest News Headlines
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Generated Image: Midjourney
The post JPMorgan Chase, Bank of America, Wells Fargo and Citigroup Risk Losing $24,400,000,000 As Number of Troubled Loans Erupt: Report appeared first on The Daily Hodl.
Original source: The Daily Hodl