The largest banks in the US are reportedly taking big hits to their bottom line as borrowers default on billions of dollars worth of loans.
Citing data compiled by Bloomberg, the Financial Times says that JPMorgan Chase, Bank of America (BofA), Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley appear to have written off a combined $5 billion worth of loans in Q2 of this year as consumers feel the negative impacts of inflation and higher interest rates.
The write-offs essentially mean the banks have decided to officially recognize major losses in the value of assets on their balance sheets.
The banking giants point to credit card debt as the primary source of their multibillion-dollar write-offs.
JPMorgan Chase alone absorbed losses of $1.1 billion in bad credit card debt last quarter, an increase of over 66% on a year-over-year basis.
Meanwhile, BofA’s credit card loans account for around 25% of the lender’s unrecoverable debt.
Another pain point for the six banks is the struggling commercial real estate sector, which is witnessing a significant decline in demand as large swathes of the workforce telecommute for several days a week.
Wells Fargo, an institution that reportedly holds over $35 billion worth of office loans, is allocating $1 billion to cover possible losses in the embattled sector.
All in all, the six financial titans are expected to earmark an additional $7.6 billion to accommodate loans that could turn sour.Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
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