All of a sudden: JP Morgan Chase and Bank of America admit $4,500,000,000 in losses

Pic.: dailyhodl

The two largest banks in the US are declaring a loss on $4.5 billion in debts that customers are unable to pay.

JPMorgan Chase says its net charge-offs, which are debts that the bank does not expect to receive, hit $2 billion in the first quarter of this year, reports ‘The Daily Hodl’.

That’s nearly twice the amount of unrecoverable debt compared to the same quarter last year.

Meanwhile, Bank of America reported $1.5 billion in net charge-offs, a surge from $807 million a year prior.

BofA says those losses stem mainly from credit card debt that will likely never be paid.

“Bank of America is seeing ‘cracks’ in the finances of borrowers with below-prime credit scores whose household spending is affected by higher interest rates and inflation, Chief Financial Officer Alastair Borthwick told analysts on an earnings call…

While lenders earn money from interest payments, they seek to avoid situations in which customers fall so far behind on loans that they have to be written off.”

Net charge-offs are also on the rise at Citigroup and Wells Fargo as a recent poll from the Federal Reserve finds most banks are now tightening lending standards for most types of loans.

“Banks reported tighter standards and weaker demand for home equity lines of credit (HELOCs). Moreover, for credit card, auto, and other consumer loans, standards reportedly tightened, and demand weakened on balance.”

Despite the losses, both JPMorgan Chase and Bank of America say their balance sheets are sound.

JPMorgan Chase earned $49.6 billion in profit last year, while Bank of America earned $24.9 billion.

… JPMorgan Chase and Bank of America are the largest financial institutions in the United States and around the world. They rarely admit their difficulties. If even such giants of the banking system give negative signals, it means that they may follow by new problems that could have an impact on the entire US financial system.

I wonder why these banks began to complain so openly about their difficulties?

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