US banks are increasingly offloading billions of dollars in bad debt that they’ve officially given up on collecting, according to new numbers from the Federal Deposit Insurance Corporation (FDIC).
In its new Quarterly Banking Profile report, the FDIC says US banks reported $21.3 billion in net charge-offs in the second quarter of the year, due largely to credit card delinquencies and sour commercial real estate loans.
That’s the highest quarterly net charge-off rate since the second quarter of 2013 and 20 basis points higher than the same period last year as customers continue to battle higher interest rates and inflation.
The new numbers come as JPMorgan Chase, Wells Fargo and Bank of America individually disclose billions of dollars in collective net charge-offs in Q2.
JPMorgan Chase says its net charge-offs reached $2.2 billion in Q2, up from $1.4 billion in Q2 of last year.
Wells Fargo says its net charge-offs surged to $1.3 billion last quarter, up from $764 million one year ago.
And Bank of America says its net charge-offs hit $1.5 billion, up from $900 million year-over-year.
The FDIC says the total charge-off rate for US banks is now higher than the pre-pandemic average.
The charge-off rate for credit cards was particularly notable in Q2 at 4.82%, an increase of 13 basis points from the previous quarter.
This marks the highest credit card charge-off rate since the third quarter of 2011.
The data aligns with a recent report from the Philadelphia Federal Reserve, which found the number of credit card balances that are past due hit the highest level ever in Q1 of this year, according to records that date back to 2012.
Overall, the FDIC says the second quarter net income for all 4,539 FDIC-insured commercial banks and savings institutions hit $71.5 billion, representing a $7.3 billion increase over the previous quarter.
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