Bank / Credit Union
Banks expect major losses in second quarter
July 13, 2020
America's banks are braced for poor second quarter results that are due this week, according to a CNN report.
Among the banks expected to show losses are JPMorgan Chase, Bank of America and Citigroup. All three banks are expected to report plunged down as much as 50%. Wells Fargo will not only have to slash dividends, it will announce the bank's first quarterly loss since the financial crisis in 2008, according to CNN.
The biggest hit to bank profits has been an overwhelming amount of delinquent loans caused by the pandemic.
During the first quarter, Bank of America JPMorgan, Citi, Wells Fargo and US Bancorp collectively set aside an additional $35 billion in preparation for loans that had the potential to default. The damage to the bottom line from these loans proved to be worse than anticipated.
Beyond bankruptcies from major brands, including Brooks Brothers and J.Crew and country-wide unemployment, banks have suffered from low interest rates, but according to the Federal Reserve, the zero interest rates are going away anytime soon.
