Four of America’s biggest banks wrote off a combined $3.4 billion in loans during the first three months of 2023.
The banks are putting aside increased amounts in reserves to cover the risk of more borrowers failing to repay their debt.
High inflation is eroding consumer’s savings and causing them to fall behind on loan payments.
Wall Street’s biggest banks are putting aside more reserves to cover an increasing number of borrowers who are having a harder time paying their loans back.
JPMorgan, Bank of America, Wells Fargo and Citigroup – four of the most valued US lenders – wrote off $3.4 billion in bad consumer loans in the first three months of this year, Bloomberg estimates show. That’s a 73% increase from a year earlier, the outlet reported.
JPMorgan, the biggest US bank and the world’s largest issuer of credit cards, said bad card loans climbed 82% from a year earlier to a staggering $922 million, per Bloomberg. The 30-day delinquency rate on these overdue loans – which can be a gauge of losses to come – jumped to 1.68% from the 1.09% seen in 2022.
The soaring loan write-offs for borrowers come as inflation remains well above the Federal Reserve’s 2% target, coming in at 5% last month. The US central bank has been increasing interest rates at the fastest pace since the 1980s, to combat consumer-price pressures which hit a 40-year high last year.
High inflation is chipping away at consumers’ savings, eroding their purchasing power and causing them to fall back behind on their loan payments to the banks.
Read the original article on Business Insider