America’s biggest banks are reporting a rapid increase in the number of substandard, doubtful and potentially loss-making loans on their balance sheets, according to a new report.
The amount of money tied up in criticized loans, which show emerging signs of risk and weakness that could lead to defaults, just reached its highest level since 2020, reports S&P Global.
JPMorgan Chase has witnessed the largest year-over-year increase, with the number of criticized loans at the firm jumping 26.3%, reaching $26.01 billion at the end of Q3.
Meanwhile, Wells Fargo has recorded a 17.9% year-on-year increase in criticized loans, at $37.6 billion, while Bank of America recorded a 15.2% year-on-year increase, at $26.06 billion.
That brings the total amount of the criticized loans at the trio of banks to $89.67 billion since Q3 of 2023, reflecting a trend that’s playing out at banks across the board.
“Criticized loans at public US banks amounted to $279.98 billion, versus $240.37 billion at the end of 2023, and such loans at the 100 largest US public banks totaled $260.48 billion, versus $219.82 billion at 2023-end.”
Among tier-one banks with over $50 billion in total assets, four lenders recorded triple-digit increases in criticized loans.
Flagstar Financial recorded a 338.6% year-on-year increase in criticized loans while First Horizon, Valley National Bancorp and Webster Financial Corp witnessed 112.2%, 110.1% and 102.8% year-on-year increases in criticized loans.
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