Logo
Wednesday, 19 June 2024
Wednesday, 15 Jul 2020 02:26 am

Big U.S. banks predict more economic pain from coronavirus

Three of the largest U.S. banks said on Tuesday they had set aside a whopping $28 billion for loan losses, in a stark reminder that much of the economic pain from the coronavirus pandemic is still to come.

newsImage
 

Borrowers have been propped up by trillions of dollars in government and bank assistance, cheap credit and loan forbearance programs, but some of that support is going away, and banks said they fear losses will spike.

“The consumers’ incomes are up, savings are up and home prices up,” said JPMorgan Chase & Co CEO Jamie Dimon said on a call with journalists. “The recessionary part” will come later, he said.

JPMorgan and Citigroup Inc each reported huge second-quarter profit declines on Tuesday, while Wells Fargo & Co posted its first loss since 2008.

Banks with big Wall Street businesses were able to offset their loan woes with huge gains in capital markets revenue, particularly trading. The rough results were almost entirely due to loan-loss provisions.

The unprecedented government aid programs have created a disconnect between the financial markets and the economy, such that financial conditions look sunny, but could turn upside down quickly if the temporary assistance expires.

Executives warned that there is still a lot of guesswork involved. Under new accounting rules, lenders have to reserve for the entire life of a loan upfront. That would be tricky under normal circumstances, but when a deadly virus is hitting the economy in unpredictable waves, it is especially hard to say how long the downturn might last.

Read More


Meeta Ramnani

Meeta develops credible content about various markets based on deep research, opinions from experts and inputs from industry leaders. As the managing editor at Smart Market News, she assures that every piece of news and article adds to the knowledge of decision makers. An avid bike rider, Meeta, is a postgraduate from Indian Institute of Journalism and New Media (IIJNM) Bangalore, where her specialization was Business Journalism. She carries experience from mainstream print media including The Times Group and Sakal Media Group.


Smarter Decisions with Smart News

Smart Market News is committed to getting its readers the latest updates and insights on industries that help in making “smarter” business decisions. With insights and inputs from corporate decision makers, we bring you the stories of adopting innovative solutions and strategies that have been changing the world. Our editorial insights on products, solutions, companies, and adoption of best practices not only help in understanding the markets better, but also prove to be a complete package for your information needs.

Subscribe to our newsletter
Get the latest in your inbox weekly Sign up for the fully charged newsletter
© The News and Media Division of The Insight Partners 2024 | All Rights Reserved | Privacy Policy